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ICI Pakistan Limited Annual Report 2016 -17 1

2 ICI Pakistan Limited Annual Report 2016 -17


ICI Pakistan Limited Annual Report 2016 -17 1

Driven to
Innovate
At ICI Pakistan Limited, what keeps us moving in today’s
rapidly changing world is our unrelenting drive to innovate.

An innovative mindset for us means changing how we do


business and how we operate on a fundamental level. It’s
what compels us, urging us onward. Pushing us to break
boundaries. To shatter held assumptions. To enter new
markets, and develop new ways of operating in existing ones.

We’re not afraid of a challenge, because we believe that


new ways of doing things can bring unprecedented
rewards. We know that Cultivating Growth means being
fearless in the pursuit of bigger, better ideas. And that
ultimately, bigger and better ideas give us the power to
transform for a brighter future of endless possibilities.
2 ICI Pakistan Limited Annual Report 2016 -17

ICI Pakistan Limited


at a Glance
What we do Our Company’s growth ambitions are further demonstrated
ICI Pakistan Limited is a dynamic, growing Pakistan-based by expansion, through both, organic and inorganic means. In
manufacturing and trading company that provides essential 2016-17, two acquisitions were undertaken to augment the
products for a diverse range of applications in almost every Life Sciences Business’s Pharmaceuticals Division portfolio.
industry in Pakistan. A local pharmaceutical manufacturing company, Cirin
Pharmaceuticals (Private) Limited was acquired successfully,
Currently our primary Businesses are Soda Ash, Polyester, while certain assets and registrations of Wyeth Pakistan
Life Sciences and Chemicals. In addition, ICI Pakistan Limited are also in the process of being acquired. (The latter
Limited has a growing footprint in the infant milk formula is subject to the completion of regulatory formalities.)
business in partnership with Morinaga Milk Industry Company
Limited (Morinaga) of Japan, and Unibrands (Private) Limited A public limited company employing over 1,300 people, ICI
(Unibrands). Pakistan Limited operates across Pakistan, with several
key manufacturing facilities in Sindh, Punjab and KPK
Our products include: soda ash, polyester staple fibre province, as well as extensive sales and distribution networks
(PSF), general and specialty chemicals, toll-manufactured spread across the country. We remain focussed on our
pharmaceuticals, nutraceuticals, animal health products overarching promise, Cultivating Growth, in everything that
and agricultural products (including chemicals, field crop we do, to continually create greater value for our customers,
seeds, vegetable seeds and more). In the infant milk formula shareholders, partners and communities.
category, our Company has a management stake in NutriCo
Pakistan (Private) Limited, which manages the import,
marketing and distribution of select Morinaga products in Ownership / About YBG
Pakistan. A Company with a rich history, the existence of ICI Pakistan
Limited pre-dates the formation of Pakistan itself. In
December 2012, when Lucky Holdings Limited acquired
Growth and Expansion the shareholding of ICI Omicron B.V., ICI Pakistan Limited
To expand our presence in the infant milk formula segment became part of the Yunus Brothers Group (YBG), and a
in 2016-17 we entered into a joint venture with Morinaga and proudly national company.
Unibrands through our majority-owned subsidiary, NutriCo
Morinaga (Private) Limited, to locally manufacture Morinaga infant Established in 1962, YBG is one of the fastest-growing and
formula at a state-of-the-art Morinaga manufacturing facility. The most progressive Pakistani conglomerates with a wide
first Morinaga manufacturing facility to be established in Pakistan, portfolio of businesses including, but not limited to: cement,
this is expected to come online in 2018. textiles, power generation and commodity trading.
ICI Pakistan Limited Annual Report 2016 -17 3

Total Turnover by Business

12%

31%
Total turnover

28% PKR 47.5


billion

29%

Polyester Soda Ash Life Sciences Chemicals

Geographical Locations

Peshawar

Cirin Pharmaceuticals
Plant, Hattar, KPK Islamabad

Soda Ash Plant


Khewra
Corporate Office
Lahore
Faisalabad Animal Health
Sahiwal Manufacturing Facility
Lahore
Multan Polyester Plant
Sheikhupura

Head offices and


Corporate offices
Plants and manufacturing sites
Sukkur
Regional and Business offices
Hyderabad
Head Office
Karachi Chemicals Plant
Karachi
Nutraceuticals Plant
Karachi

Industries Served
Polyester Soda Ash Life Sciences Chemicals
Textiles Textiles Pharmaceuticals Textiles Chemical Processing/Resins
Footwear Nutraceuticals Paints Plastics/Rubber/Tanneries
Oil/Petroleum Animal Health Appliances Crops
Food and Beverage Agriculture Construction Coatings/Inks
Personal Care Automobile Detergents/Laundry Soaps
Pharmaceuticals Footwear Surgical
Chemical Processing/Resins Edible Oil Fertilisers
Plastics/Rubber/Tanneries Oil/Petroleum Furniture and Mattresses
Detergents/Laundry Soaps Food and Beverage Sporting Goods
Paper/Ceramics/Glass Personal Care Dairy
Livestock and Poultry Metal Cleaning/Engineering Hotels, Restaurants and Cafes
Agro Chemicals Sugar
Pharmaceuticals Glass and Ceramics
Cement
4 ICI Pakistan Limited Annual Report 2016 -17

Lucky Holdings Limited

Group Structure
ICI Pakistan Limited
Lucky Holdings Limited

ICI Pakistan Limited

ICI Pakistan NutriCo Morinaga Cirin Pharmaceuticals


PowerGen Limited (Private) Limited (Private) Limited

ICI Pakistan NutriCo Morinaga Cirin Pharmaceuticals


PowerGen Limited (Private) Limited (Private) Limited

Organisational Structure

Chief Executive

Chief Executive

Chief Financial Corporate


Officer
Chief Financial Technical
Corporate
Officer Technical
Strategy & Soda Ash
Strategy & Soda Ash
Business Business
Business
Business
Development
Development
LifeLife Sciences
Sciences
Human Business
Business
Human
Resources
Resources Polyester
Polyester
Business
Company Secretariat, Business
Company Secretariat,
Legal & CCPA
Legal & CCPA Chemicals
Business
Chemicals
Business
ICI Pakistan Limited Annual Report 2016 -17 5

Aerial Perspective of ICI Pakistan Limited for the Year ended


June 30, 2017

A LS
MIC
C HE 9m
R 4,78
ve r PK
o
ur n
e tT 22%
N M
GP
2%
M1
OP

Ne
tT

PO
Margin 11%
PBT

ur

LY
no
ve

ES
r
GP
Margin 8%

PK
PAT

T ER
M
OL

R1
1%
M

4,38
3%
EPS
m

8m
r PKR 11,153
CIENCES

GPM 29%

OPM 11%

TSR
150%
Turnove
LIFE S

Net

35.69

PKR 3,296 m

PKR 4,394 m

OPM 25%

GPM 30%
4 1m
Net Turn 11,0
over PKR

SOD A AS H

TSR: Total Shareholder Return


EPS: Earnings per share
PAT: Profit after Taxation
PBT: Profit before Taxation
OPM: Operating Profit Margin
OLM: Operating Loss Margin
GPM: Gross Profit Margin
6 ICI Pakistan Limited Annual Report 2016 -17

Key Performance
Indicators
Statement of income Ratios

12% In PKR million 12% In PKR million


Net 2015-16 36,954 Equity 2015-16 14,417
turnover 2016-17 41,364 2016-17 16,184

16% In PKR million 112% In times


Operating 2015-16 3,479 Price 2015-16 14.46
result 2016-17 4,044 earning
2016-17 30.67

2%
26% In PKR million Return In %
Profit before 2015-16 3,498 on capital 2015-16 17.04
tax 2016-17 4,394 employed 2016-17 17.45

16% In PKR million 1% % of revenue


Profit after 2015-16 2,843 Return on 2015-16 20.39
tax 2016-17 3,296 fixed assets 2016-17 20.60

11%
17% In PKR million Operating In PKR million
EBITDA 2015-16 5,378 result per 2015-16 2.63
2016-17 6,267 employee 2016-17 2.92

4% % of Net Turnover 13% In PKR million


EBITDA 2015-16 14.55 Capital 2015-16 4,254
margin 2016-17 15.15 expenditures 2016-17 4,800

16% In PKR
Earnings 2015-16 30.78
per share 2016-17 35.69
ICI Pakistan Limited Annual Report 2016 -17 7

Operating result and EBITDA


PKR million
19.00
2014-15 3,044 4,701

17.00
2015-16 3,479 5,378

2016-17 4,044 6,267 17.5

Operating result EBITDA ROCE

Shareholder’s equity and EBITDA per share


In PKR

2014-15 137.69 50.9

2015-16 156.09 58.2

2016-17 175.23
67.9

Shareholder’s equity per share EBITDA per share

Net debt and equity


PKR million
12,717
2014-15 4,333

14,417
2015-16 6,011

16,184
2016-17 7,672

Equity Debt
8 ICI Pakistan Limited Annual Report 2016 -17

Contents

Overview Governance &


& Strategy Compliance
Vision 10 Corporate Governance & Compliance 58

Values 11 Risk Management 62

Code of Conduct 14 Board and Management Committees 66

Sustainability Guiding Principle 15 Company Information 67

Message from the Chief Executive 16 Our Board of Directors 68

Financial Statements at a Glance 18 Our Executive Management Team 72

Financial Highlights 20 Report of the Directors 74

Operating & Financial Highlights 24 Statement of Compliance 87

Six Year Analysis 26 Review Report 89

SWOT Analysis 29

Vertical & Horizontal Analysis 30

Quarterly Analysis 34

DuPont Analysis 36

Share Price Sensitivity Analysis 37

Year in Review 38

Awards & Achievements 41

Human Resources 42

Information Technology 46

Health, Safety, Environment and 48


Security (HSE&S)

Community Investment 53
ICI Pakistan Limited Annual Report 2016 -17 9

Business Sustainability Financial


Performance Performance Performance
Soda Ash 92 Message from the CE 116 ICI Pakistan Financial F01
Statements
Life Sciences 96 Sustainability Performance 117
2016-17 at a Glance Pattern of Shareholding F50
Chemicals 104
Sustainability Strategy & 118 Notice of Meeting F53
Polyester 108 Sustainability Council
Form of Proxy F57
About the Report 120
ICI Pakistan Consolidated F59
Materiality Assessment 121 Financial Statements

Stakeholder Engagement 123 Glossary F108

Economic Performance 127 Admission Slip F109

Environmental Performance 130 Form of Proxy (Urdu)

Social Performance 138 Mandate Letter

GRI Content Index 148

Assurance Statement 158


10 ICI Pakistan Limited Annual Report 2016 -17

Our
Vision
As the partner of choice, we aspire to build
our local and international footprint through
sustainable growth and by creating value
for all our stakeholders.
ICI Pakistan Limited Annual Report 2016 -17 11

Our
Values
We live by our values. In the changing, expanding
world of ICI Pakistan Limited, our values remain an
enduring constant. They are what define us.

Customer Centricity
We are committed to the success of our customers and their needs are at the centre of
our universe - we exist because of them.

Integrity & Responsibility


Ethical and responsible behaviour is our license to operate. Uncompromising integrity in all
our dealings is the backbone of our DNA. We have a zero tolerance policy to violations of
our Code and beliefs.

Innovation
To be responsive to the challenges of change and to new and existing opportunities, we
need to constantly come up with better, smarter and simpler solutions.

Passion for People


Our success is based on the multiplier effect of our people. Our Passion for People drives
us to harness their energies, cultivate and nurture their talent, manage their well-being and,
most importantly, create a learning environment conducive for development and growth.

Delivering Enduring Value


Delivering sustained growth and enduring value to benefit our shareholders, employees,
suppliers, customers and the communities in which we operate.
12 ICI Pakistan Limited Annual Report 2016 -17
ICI Pakistan Limited Annual Report 2016 -17 13

Overview & Strategy

Channeling
Innovation
Innovative thinking opens the door to a universe of
possibilities. Motivated by a constant need to evolve, we
are eager to explore this universe – resolved to innovate.
And to harness our energies and channel our efforts
effectively, we need direction, which is provided by our
leadership, our strategic priorities and our purpose.

This section highlights our strategic priorities, provides an overview of our


key performance areas, and features the Chief Executive’s message.
14 ICI Pakistan Limited Annual Report 2016 -17

Our Code of
Conduct
At ICI Pakistan Limited, we have always believed in adhering to the highest
ethical standards while doing business. The ICI Pakistan Limited Code of
Conduct encompasses our business principles and the ethical standards
we hold ourselves to. It is our guide at every step of the way.

• Ensure the rights of employees to join unions/


A brief overview of the Code associations

Business Principles • Protect personal data of employees


Each employee should implement our core values, comply
with and observe applicable laws, support fundamental • Engage in an active performance and development
human rights and give due regard to health, safety and the dialogue
environment.

Business Integrity Employee Responsibilities


• Bribery and any other form of unethical business The Code provides employees guidance on their
practices are prohibited responsibilities vis-a-vis:

• We promote free enterprise and require strict compliance • Media relations and disclosures
with competition laws
• Inside information
• As responsible corporate citizens, we encourage
participation in community activities and take all • Corporate identity
measures for the safety and health of our employees as
well as for the protection of the environment • Protecting our intellectual property

• Employees are expected to maintain confidentiality, act • Internet use


in the Company’s interests at all times, and also observe
applicable laws, support fundamental human rights and • Business travel policy
give due regard to health, safety and the environment
• Prohibition on substance abuse
Company Responsibilities
The Code encourages us to:

• Adopt the spirit of open communication

• Provide equal opportunities and a healthy, safe and


secure environment
ICI Pakistan Limited Annual Report 2016 -17 15

Sustainability
Guiding Principle
We are committed to reducing the environmental
impact on our planet by delivering more
sustainable products and solutions to our
customers. We can achieve this only if
sustainability is at the heart of everything we
do, integrated in all areas of our operations –
for the benefit of our customers, shareholders,
employees and, in fact, the world around us.
16 ICI Pakistan Limited Annual Report 2016 -17

Message from the


Chief Executive
ICI Pakistan Limited Annual Report 2016 -17 17

Dear Stakeholders, Our Chemicals Business delivered its highest ever operating
profit, attributable to an increase in net turnover driven by
The year 2016-17 has been a particularly eventful one for several factors including: higher sales volumes, an expanded
us at ICI Pakistan Limited. It has been marked by milestone customer base, and the realised benefits of cost efficiencies.
expansions, acquisitions and partnerships, all of which have In addition to solid performance, the Business is gearing up for
contributed to the Company’s growth and success. a significant new development in the upcoming year, having
received the Board of Directors’ approval to set up a Masterbatch
It has also been a year for increasingly innovative approaches manufacturing facility in Karachi worth PKR 590 million.
to doing business. So much so, that this year, the theme for our
annual report underscores our unrelenting drive to innovate. This During the year 2016-17, in our pursuit of bigger and better
drive urges us to create value in more dynamic ways. It means opportunities, we undertook another major development,
we pursue new avenues for growth, and assess potential at executing a shareholders agreement for the establishment of a
every step of the way. We are confident that this approach will state-of-the-art facility to manufacture Morinaga infant formula
keep us on track for exponential progress and development as products along with the distribution, marketing and sales of these
we continue Cultivating Growth in all that we do. products. The project is in its execution phase through a newly
incorporated subsidiary, NutriCo Morinaga (Private) Limited, in
The robust performance we have achieved to date, the which the Company has majority shareholding of 51%.
innovative initiatives we have spearheaded and the bold steps
we’ve taken in new ventures, all demonstrate our determination Today, we recognise that leadership in a dynamic world is
to achieve enduring success. The drive and commitment of the result of many factors, one of the most critical of which is
our people is second to none, and continues to be our greatest people. During the year, we continued to invest in our people
asset. As always, our core focus remains on our customers through cross-Business and cross-functional talent movement
and stakeholders, compelling us to create enduring value while to ensure our teams benefit from diverse experience, enabling
achieving superior outcomes. them to bring greater value to the table. Our revamped
Graduate Recruitment Drive further strengthened ICI Pakistan
During the year under review, unconsolidated profit after tax at Limited’s position as an employer of choice, targeting the
PKR 3,296 million is 16% higher than the same period last year, millennial generation via digital platforms. Additionally, the
with operating results for the year at PKR 4,044 million also impressive year-on-year increase in our employee engagement
16% above the same period last year. levels indicates that we are heading in the right direction, and
speaks volumes of the Company’s commitment to its people.
Performances during the year were positive, with top line
growth in the Polyester, Life Sciences and Chemicals Health, safety, environment and security (HSE&S) remains a
Businesses. The Polyester Business achieved an optimum level top priority as we continue refining our processes for safer,
of production during the year with revenue growth achieved more sustainable operations for today and tomorrow. It is my
due to higher prices across the petrochemical chain, which intent to ensure that ICI Pakistan Limited is one of the safest
translated into higher average Polyester Staple Fibre selling companies to work for, and I am pleased to share with you
prices, coupled with higher sales of our premium Black Fibre. that a number of initiatives have been successfully rolled out in
this regard during the year. Our CSR programme continues to
In the Soda Ash Business, we maintained our footprint in the support people in our communities, with successful projects
South Asian market and continue to strengthen our position as such as the Hamqadam Community Clinic in Khewra proving
the leading supplier in Pakistan. The successful commissioning to be valuable additions to local infrastructure.
of the steam turbine led to the achievement of a milestone for
the Business with the Soda Ash plant successfully operating Looking ahead, I believe that ICI Pakistan Limited is well poised
on a single power source for the first time in its history. to maintain its growth momentum. My colleagues and I look
forward to the coming year, and we are determined to deliver
The Life Sciences Business posted strong results during the greater value for you.
year under review. All Divisions achieved their highest annual
net turnover, with double-digit growth across all categories. Warm Regards,
The Business continued to make major inroads by enhancing
its manufacturing capabilities and expanding its product
portfolio with two key acquisitions; Cirin Pharmaceuticals
(Private) Limited and certain Wyeth Pakistan Limited-owned
assets (the latter will follow completion of regulatory formalities). Asif Jooma,
The future of the Business remains encouraging, exhibiting Chief Executive
solid growth potential that excites us all. ICI Pakistan Limited
18 ICI Pakistan Limited Annual Report 2016 -17

Financial Statements
at a Glance
Assets
PKR million

40,000
907 (6)
35,000 581
1,510
30,000 2,576
25,000
20,000 36,156
15,000 30,588

10,000
5,000
0
2015-16 Operating fixed Other long term Inventory Trade debts Other current 2016-17
assets assets assets

Equity and Liabilities


PKR million

40,000

35,000
(164) 1,507
30,000 154 2,389
(85)
1,767
25,000

20,000 36,156
15,000 30,588

10,000

5,000

0
2015-16 Unappropriated Surplus on Short-term Trade and other Others Long-term loans 2016-17
profit revaluation of borrowings and payables
property, plant running finance
and equipment
ICI Pakistan Limited Annual Report 2016 -17 19

Profit and Loss Account


PKR million

45,000

40,000

35,000

30,000
(33,598)
25,000
41,364
20,000

15,000
(3,722)
10,000
(542) 893 (1,098)
5,000
3,296
0
Net turnover Cost of sales Operating Other charges and Other income Taxation Profit after
expenses finance cost taxation

Cash flow
PKR million

4,000
3,007
Operating activities
3,000
PKR 4,825m
Investing activities
2,000
PKR (4,931m)
1,000

(1,000) Financing activities PKR (53m)

(2,000)
(1,818) (1,924) (1,977)
(3,000)
Cash & Cash equivalents Cash & Cash equivalents
2015-16 2016-17
20 ICI Pakistan Limited Annual Report 2016 -17

Financial Highlights
Our results compared to the same period last year at a glance
• 2016-17 turnover up by 11%
• 2016-17 gross profit up by 20%
• 2016-17 profit after taxation up by 16%
• 2016-17 earnings per share: PKR 35.69 (June 30, 2016: PKR 30.78)

Total turnover by Business Operating result by Business

Total turnover PKR 47.5 billion Total operating result PKR 4 billion

% 14% -11%
% 12%

Polyester 31 31% Polyester -11

Soda Ash 29 Soda Ash 68 29%


28%
Life Sciences 28 Life Sciences 29
68%
Chemicals 12 Chemicals 14
29%

Polyester Soda Ash Life Sciences Chemicals Polyester Soda Ash Life Sciences Chemicals

Turnover
PKR million

2012 18,354 9,219 6,251 4,026

2012-13 19,758 9,499 6,502 3,915

2013-14 19,667 10,933 7,505 4,599

2014-15 16,674 12,207 9,107 4,621

2015-16 14,236 13,392 10,265 4,801

2016-17 14,648 13,804 13,536 5,568

Polyester Soda Ash Life Sciences Chemicals

Gross profit
PKR million

2012 449 1,352 1,515 677

2012-13 303 1,601 1,523 648

2013-14 (224) 2,367 1,812 697

2014-15 82 2,846 2,120 742

2015-16 (338) 3,408 2,514 894

2016-17 137 3,313 3,261 1,055

Polyester Soda Ash Life Sciences Chemicals

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
ICI Pakistan Limited Annual Report 2016 -17 21

Earnings per share


PKR
2012 10.54

2012-13 12.55

2013-14 18.43

2014-15 23.02

2015-16 30.78

2016-17 35.69

Revenue development (Business-wise) Operating result development (Business-wise)


PKR million PKR million

2015-16 42,694 2015-16 3,479

Polyester 412 Polyester 417

Soda Ash 412 Soda Ash (126)

Life Sciences 167


Life Sciences 3,271

767 Chemicals 107


Chemicals
2016-17 4,044
2016-17 47,556

EBITDA Profit after taxation


PKR million PKR million

2012 2,703 2012 974

2012-13 3,094 2012-13 1,159

2013-14 1,702
2013-14 3,565
2014-15 2,126
2014-15 4,701
2015-16 2,843
2015-16 5,378
2016-17 3,296
2016-17 6,267

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
22 ICI Pakistan Limited Annual Report 2016 -17

Profitability ratios

Gross margin Operating result margin Profit before taxation margin


% % %

2012 11.51 2012 4.68 2012 4.31

2012-13 11.23 2012-13 5.48 2012-13 4.82

2013-14 12.17 2013-14 5.82 2013-14 5.18

2014-15 15.43 2014-15 8.11 2014-15 7.21

2015-16 17.53 2015-16 9.41 2015-16 9.47

2016-17 18.77 2016-17 9.78 2016-17 10.62

Profit after taxation margin Return on assets Return on equity


% % %

2012 2.81 2012 4.70 2012 9.97

2012-13 3.19 2012-13 5.53 2012-13 11.05

2013-14 4.45 2013-14 7.42 2013-14 14.33

2014-15 5.67 2014-15 7.97 2014-15 15.99

2015-16 7.69 2015-16 9.30 2015-16 18.65

2016-17 7.97 2016-17 9.12 2016-17 19.47

Return on capital employed Revenue per employee Net income per employee
)PKR million( )PKR million(
%

2012 14.30 2012 31.64 2012 0.89

2012-13 14.66 2012-13 34.02 2012-13 1.09

2013-14 14.49 2013-14 33.16 2013-14 1.48

2014-15 18.96 2014-15 30.21 2014-15 1.71

2015-16 17.04 2015-16 27.89 2015-16 2.15

2016-17 17.45 2016-17 29.84 2016-17 2.38

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
ICI Pakistan Limited Annual Report 2016 -17 23

Liquidity and other ratios Efficiency ratios

Price earning ratio Current ratio Inventory days


)Times(

2012 16.49 2012 2012 60.93


1.05
2012-13 13.26 2012-13 2012-13 62.67
1.31
2013-14 21.18 2013-14 2013-14 55.83
1.38
2014-15 18.63 2014-15 2014-15 61.65
1.02
2015-16 14.46 2015-16 1.15 2015-16 69.97

2016-17 30.67 2016-17 1.01 2016-17 69.52

Cost ratios
Administration cost Stockholder’s equity per Debtor days
as % of net turnover common share
)PKR(

2012 3.75 2012 97.72 2012 4.88

2012-13 2.86 2012-13 105.99 2012-13 7.23

2013-14 2.34 2013-14 121.67 2013-14 8.23

2014-15 2.57 2014-15 137.69 2014-15 11.14

2015-16 2.39 2015-16 156.09 2015-16 15.17

2016-17 2.70 2016-17 175.23 2016-17 18.48

Operating cost as % of net Market value per share Creditor days


turnover * )PKR(

2012 95.32 2012 173.89 2012 46.87

2012-13 94.52 2012-13 166.40 2012-13 42.23

2013-14 94.18 2013-14 390.34 2013-14 37.55

2014-15 91.89 2014-15 428.87 2014-15 50.52

2015-16 90.59 2015-16 445.02 2015-16 54.08

2016-17 90.22 2016-17 1,094.55 2016-17 53.03

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
* Operating cost includes cost of sales, selling, distribution, administration and general expenses
24 ICI Pakistan Limited Annual Report 2016 -17

Operating & Financial


Highlights
January to December July to June

Ratios 2008 2009 2010 2011 2012 2012-13 2013-14 2014-15 2015-16 2016-17

Restated Restated Restated

Profitability Ratios

Gross margin % 19.77 19.96 19.03 12.97 11.51 11.23 12.17 15.43 17.53 18.77

Gross profit turnover % 17.22 17.52 16.91 12.01 10.56 10.28 10.89 13.59 15.18 16.33

Operating result margin % 10.98 10.65 10.57 6.70 4.68 5.48 5.82 8.11 9.41 9.78

Profit after taxation margin % 6.70 7.19 6.91 4.31 2.81 3.19 4.45 5.67 7.69 7.97

Profit markup % 24.64 24.94 23.51 14.90 13.01 12.66 13.85 18.25 21.26 23.11

Profit before taxation margin % 10.12 10.81 10.62 6.46 4.31 4.82 5.18 7.21 9.47 10.62

Return on equity % 13.89 14.19 15.72 15.48 9.97 11.05 14.33 15.99 18.65 19.47

Return on capital employed % 21.77 19.38 22.43 21.18 14.30 14.66 14.49 18.96 17.04 17.45

Return on assets % 10.08 9.54 11.02 7.47 4.70 5.53 7.42 7.97 9.30 9.12

Return on fixed assets % 32.61 32.82 40.91 28.55 15.99 18.75 19.00 21.34 20.39 20.60

Growth Ratios

Net turnover % 20.74 2.27 23.57 1.10 (2.35) 5.83 5.42 (1.88) (1.50) 11.93

Operating results % 2.29 (0.81) 22.62 (35.94) (31.69) (5.07) 12.04 36.76 14.28 16.24

EBITDA % - 1.04 19.45 (28.89) (18.38) 1.82 15.20 31.89 14.39 16.54

Profit after taxation % 4.37 9.77 18.78 (36.95) (36.42) (9.35) 46.91 24.88 33.75 15.93

Efficiency Ratios

Asset turnover Times 1.51 1.33 1.59 1.73 1.67 1.73 1.67 1.41 1.21 1.14

Fixed asset turnover Times 2.97 3.08 3.87 4.26 3.41 3.42 3.26 2.63 2.17 2.11

Inventory turnover Times 6.39 6.08 6.71 7.15 5.18 6.27 6.53 5.69 4.99 5.02

Current asset turnover Times 3.46 2.56 2.96 3.13 3.53 3.77 3.66 3.47 3.16 3.14

Capital employed turnover Times 2.28 2.07 2.39 3.41 3.33 2.92 2.78 2.65 2.09 2.05

Operating working capital turnover Times 21.09 121.06 35.56 (10.90) 26.59 12.24 19.88 20.74 16.99 14.65

Debtor turnover ratio Days 11.81 11.08 8.90 5.91 4.88 7.23 8.23 11.14 15.17 18.48

Creditor turnover ratio Days 50.52 41.00 40.06 37.17 46.87 42.23 37.55 50.52 54.08 53.03

Debtor turnover ratio Times - - - 61.74 74.75 50.51 44.35 32.77 24.06 19.75

Creditor turnover ratio Times - - - 7.88 6.25 6.84 7.39 5.46 5.01 5.20

Inventory turnover ratio Days 52.43 58.00 51.19 50.53 60.93 62.67 55.83 61.65 69.97 69.52

Operating cycle Days 13.72 28.08 20.03 19.28 18.94 27.66 26.51 22.27 31.05 34.96

Revenue per employee PKR'000 21,044 21,852 26,878 32,025 31,644 34,022 33,160 30,206 27,890 29,844

Net income per employee PKR'000 1,410 1,572 1,858 1,381 888 1,086 1,476 1,712 2,146 2,378

Dividend includes both approved and recommended during the year


2011, 2012 and 2012-13 numbers have been restated due to IAS 19 revision
Years 2011 onwards exclude the effect of Paints business due to demerger
Year 2012-13 is based on twelve months performance for a meaningful comparison
*Interest cover and finance costs (% of net turnover) is zero in 2009, 2010 and 2011 due to net interest income

ICI Pakistan Limited Annual Report 2016 -17 25

January to December July to June

Ratios 2008 2009 2010 2011 2012 2012-13 2013-14 2014-15 2015-16 2016-17
Restated Restated Restated

Cost Ratios
Operating costs (% of net turnover) % 89.02 89.35 89.43 93.30 95.32 94.52 94.18 91.89 90.59 90.22
Administration costs (% of net turnover) % 4.05 4.14 3.70 3.42 3.75 2.86 2.34 2.57 2.39 2.70
Selling costs (% of net turnover) % 4.74 5.17 4.77 2.85 3.08 2.90 4.00 4.75 5.73 6.30
Finance costs (% of net turnover)* % 0.32 - - - 0.36 0.76 1.01 1.07 1.03 0.96

Equity Ratios
Price earnings ratio Times 5.12 11.44 8.24 9.08 16.49 13.26 21.18 18.63 14.46 30.67
Earnings per share PKR 13.42 14.73 17.50 13.25 10.54 12.55 18.43 23.02 30.78 35.69
Dividend per share PKR 6.50 8.00 17.50 9.00 5.50 2.00 8.00 11.50 15.50 18.00
Dividend cover Times 2.06 1.84 1.00 1.47 1.92 6.27 2.30 2.00 1.99 1.98
Dividend yield % 3.86 6.07 12.53 6.13 3.63 1.24 3.05 2.45 3.31 2.00
Dividend payout % 48.43 54.31 100.00 81.57 52.17 15.94 43.41 49.97 50.35 50.44
Market value per share at the end of year PKR 68.71 168.49 144.24 120.27 173.89 166.40 390.34 428.87 445.02 1,094.55
Market value per share at the start of year PKR 196.65 68.71 168.49 144.24 120.27 129.85 166.40 390.34 428.87 445.02
Highest market value per share PKR 212.50 197.54 186.37 170.34 180.01 185.67 395.71 597.56 566.94 1,219.70
Lowest market value per share PKR 68.71 51.07 110.25 112.00 119.81 135.37 160.99 366.39 410.00 447.92
Break-up value per share with
surplus on revaluation PKR 96.62 103.85 111.35 85.58 105.73 113.55 128.59 143.93 165.07 183.28
Break-up value per share excluding
surplus on revaluation PKR 89.68 97.14 104.81 98.17 97.72 105.99 121.67 137.69 156.09 175.23
Cost of debt at year end % - - - - 10.45 10.17 9.49 7.16 5.67 5.56

Liquidity Ratios
Current ratio Ratio 1.81:1 1.92:1 2.17:1 1.22:1 1.05:1 1.31:1 1.38:1 1.02:1 1.15:1 1.01:1
Quick ratio / Acid test ratio Ratio 1.02:1 1.27:1 1.39:1 0.76:1 0.42:1 0.61:1 0.70:1 0.49:1 0.55:1 0.50:1
Cash ratio Ratio 0.44:1 0.77:1 0.85:1 0.50:1 0.09:1 0.10:1 0.11:1 0.01:1 0.01:1 0.01:1

Leverage Ratios
Debt to equity % - - - - 3.22 19.28 28.36 19.26 28.07 34.32
Total debt to capital ratio Ratio 0:100 0:100 0:100 0:100 3:97 15:85 21:79 16:84 21:79 25:75
Operating leverage ratio % 2.69 2.70 2.17 2.81 4.26 3.50 3.64 3.18 3.12 3.13
Interest cover* Times 32.29 - - - 12.83 7.34 6.12 7.72 10.18 12.03

Summary of Cash Flows
Cash generated from / (used in)
operations PKR million 1,188 4,938 3,716 4,127 (1,964) (164) 4,819 5,015 4,788 5,569
Net cash generated from / (used in)
operating activities PKR million 970 4,476 2,334 2,875 (3,177) (971) 3,807 3,748 3,680 4,825
Net cash used in investing activities PKR million (1,781) (938) (753) (510) (2,126) (941) (2,401) (4,372) (4,138) (4,931)
Net cash generated from / (used in)
financing activities PKR million (833) (1,041) (1,388) (2,151) (796) 1,453 933 (1,555) 404 (53)
Cash and cash equivalents at
December 31 / June 30 PKR million 1,971 4,468 4,662 4,633 (1,466) (1,924) 415 (1,764) (1,818) (1,977)

Dividend includes both approved and recommended during the year


2011, 2012 and 2012-13 numbers have been restated due to IAS 19 revision
Years 2011 onwards exclude the effect of Paints business due to demerger
Year 2012-13 is based on twelve months performance for a meaningful comparison
*Interest cover and finance costs (% of net turnover) is zero in 2009, 2010 and 2011 due to net interest income
26 ICI Pakistan Limited Annual Report 2016 -17

Six Year
Analysis
Balance Sheet Analysis

Assets
Over six years the asset base of the Company has increased
at a CAGR of 12% mainly due to property, plant and
equipment and investment in Associates. During the year
ended June 30, 2014-15 the Company invested PKR 720
25,000
million in NutriCo Pakistan (Pvt) Limited (NutriCo Pakistan),
followed by further investment of PKR 240 million during
20,000
2015-16 resulting in 40% ownership. NutriCo Pakistan is
involved in the marketing and distribution of infant milk and
15,000
nutritional products. During the current year, the Company
acquired 100% voting rights in Cirin Pharmaceuticals (Private)
10,000
Limited (Cirin) against a net consideration of PKR 981.3 million
Cirin is involved in manufacturing and sale of pharmaceutical
products. Further, during the year the Company entered into a 5,000

joint venture with Morinaga Milk Industry Company Limited and


Unibrands (Private) Limited to set up a manufacturing facility for 0
2012 2012-13 2013-14 2014-15 2015-16 2016-17
infant/growing up formula. For this purpose, a new company
has been incorporated under the name of NutriCo Morinaga Current assets Non-Current assets
(Private) Limited, in which the Company holds 51% ownership
against a consideration of PKR 510 million. Substantial growth
in property, plant and equipment is due to investment in
multiple expansion projects such as in-house steam, power
and heating systems, Refined Sodium Bicarbonate (RSB),
Dense Ash (DA) and Light Ash (LA) capacity expansion
projects.

Equity and liabilities


20,000
The shareholder’s equity comprises share capital and
reserves. The equity has increased at a CAGR of 12% over
15,000
the past six years primarily due to an increase in retained
profits of the Company and revaluation surplus. Subsequent
10,000
to revaluations in October 1959, September 2000, December
2006 and 2011, a further revaluation was conducted by an
5,000
independent valuer as at June 30, 2016.

Liabilities of the Company have increased at a CAGR of 12% 0
2012 2012-13 2013-14 2014-15 2015-16 2016-17
in the past six years. This is primarily due to long-term loans
obtained for multiple expansion projects in the Soda Ash and Equity Current liability Non-Current liability
Polyester Businesses, and acquistions and incorporation
of new companies. Current liabilities have increased due to
current portion of long-term loans due for repayment each
year, increased payables against capital expenditures and
increased mark-up on both long-term loans and short-term
borrowings and running finance.
ICI Pakistan Limited Annual Report 2016 -17 27

Profit and Loss Account Analysis


Net turnover
Decline in net turnover in the year 2012 was observed due
to lower volumes and prices in the Polyester Business with
downstream demand impacted by the deteriorating energy
crisis. An increasing trend was achieved in two consecutive
years, 2012-13 and 2013-14. In 2012-13 the increase was due
to higher revenues in the Polyester and Soda Ash Businesses
driven by volumetric growth and pricing impact, as a 44,000
consequence of continued raw material cost push and rupee
41,000
devaluation. Sales in the Chemicals Business remained flat
following the transfer of the AkzoNobel chemicals portfolio to 38,000

Akzo Nobel Pakistan Limited. During 2015-16, the net turnover 35,000
declined due to lower revenues in the Polyester Business,
32,000
which declined 15% in line with a downward correction of
prices across the petrochemical chain. During the current 29,000

financial year, the net turnover increased by 12% mainly due to 26,000
28% sales growth in the Life Sciences Business on the back
23,000
of new product launches and business expansion, and 20%
20,000
growth in net turnover of the Chemicals Business owing to
2012 2012-13 2013-14 2014-15 2015-16 2016-17
higher sales volumes and a larger customer base.
Net turnover Cost of sales
Cost of sales
Cost of sales reflected an increasing trend till 2013-14
primarily due to reliance on expensive fuel alternatives due
to gas outages. However, the Company has successfully
achieved a dip in cost of sales from FY 2013-14 onwards
due to commissioning of in-house steam, power and heating
systems, easing the energy cost burden coupled with a
reduction in fuel prices.
4,500

Operating result 4,000

A dip of 7% was observed in 2012 due to lower PSF volumes 3,500

and significant reduction in margin over feedstock, coupled 3,000

with escalation in gas outages, forcing the Polyester and 2,500


Soda Ash Businesses to rely on significantly expensive 2,000
alternate fuel, coupled with one-off demerger and divestment
1,500
expenses. Subsequent to year 2012, a consistent increase
1,000
was achieved mainly driven by higher sales volumes and
lower raw material and energy costs as a consequence of 500

lower furnace oil and coal prices; the commissioning of the 0


2012 2012-13 2013-14 2014-15 2015-16 2016-17
new Dense Ash (DA) and Refined Sodium Bicarbonate (RSB)
plants; and in-house steam, power and heating systems. Operating result

Record high operating results were achieved in the current


financial year primarily due to improved performances in
the Polyester, Life Sciences and Chemicals Businesses
driven through the expansion of product range, customer
engagement programmes as well as cost efficiencies
achieved in the Chemicals Business.
28 ICI Pakistan Limited Annual Report 2016 -17

Financial charges
Finance cost increased over the years as a result of an
increase in long-term borrowings and short term running 1,000
finance to cater to the financing needs of multiple expansion
900
projects, as well as meeting the increased working capital
800
requirements due to business growth.
700

Other income 600

Other income showed a record increase in the current 500


year at a CAGR of 25% over the past six years primarily 400
due to dividend income. Dividend of PKR 40 million and
300
PKR 150 million was received from investment in equity
200
shares and Associate in the year 2014-15 respectively, and
PKR 458 million and PKR 150 million was received from 100

Associate and PowerGen in 2015-16 respectively. During 0


2012 2012-13 2013-14 2014-15 2015-16 2016-17
the current financial year, dividend of PKR 668 million and
PKR 125 million was received from Associate and PowerGen
Financial charges Other income
respectively.

Cash flow analysis


Operating activities
The Company’s operating cash flow has increased
significantly over the past six years due to improved
performances especially in the Soda Ash and Life Sciences
Businesses. 6,000

4,000
Investing activities
The cash used in investing activities has increased at a 2,000

CAGR of 18% over the past six years and comprises mainly 0
of investment in capital expenditure and investment in
)2,000(
Associate and subsidiaries. The Company invested PKR 960
million in NutriCo Pakistan (Pvt) Limited during 2014-15 and )4,000(

2015-16 while during the current financial year, the Company )6,000(
invested PKR 981.3 million in Cirin Pharmacuticals (Private) 2012 2012-13 2013-14 2014-15 2015-16 2016-17

Limited and PKR 510 million in NutriCo Morinaga (Private) Operating activities Investing activities Financing activities
Limited, which was partially offset by cumulative dividend of
PKR 1,591 million received from Associate, subsidiary and
investment in equity shares over the past six years.

Financing activities
Financing activities comprise mainly of long-term loans
obtained and dividends paid to shareholders. The Company
has financed its expansion needs by obtaining long-term
loans, which were partially offset by dividend payments.
ICI Pakistan Limited Annual Report 2016 -17 29

SWOT
Analysis

S W
Strengths:

Diversified product portfolio, with Businesses Dependence on consistent supply of key raw
closely aligned to the needs of the country and materials, such as PTA, coke and MEG
local population. Portfolio includes soda ash, PSF, Dependence of major operating segments on fuel
pharmaceuticals, animal health products, seeds, sources such as coal, gas and furnace oil
various chemicals and investments in NutriCo
Pakistan (Pvt.) Ltd. (the Associate), Cirin
Pharmaceuticals (Private) Ltd. and NutriCo
Morinaga (Pvt.) Ltd.
Supplying products to almost every industry in the
country
Strong brand equity
Geographical presence in the local and
international markets
Operating at low gearing levels
Part of the renowned Yunus Brothers Group (YBG),
with qualified management and vast experience of
multiple sectors
Competent and committed human resources
Leading manufacturing concern with
over 70 years of successful operations
Leading soda ash producer

the country.
O
Expansion to meet growing soda ash demand in
T
Volatile international raw material and fuel prices
and government levies
In-house manufacturing facility for pharmaceutical Volatility of exchange rates
and animal health products Unavailability of natural resources, e.g. gas
Further ventures such as NutriCo Pakistan (Pvt.) Dumping of imported products
Ltd., Cirin Pharmaceuticals (Private) Ltd., and Political uncertainty
NutriCo Morinaga (Pvt.) Ltd. Unfavourable law and order situation
First mover advantage through introducing Black
Fibre
Opportunity to export various products
30 ICI Pakistan Limited Annual Report 2016 -17

Vertical and Horizontal


Analysis
Profit and Loss Account
Vertical Analysis

Jan to Dec July to June


2012 2012 2012-13 2012-13 2013-14 2013-14 2014-15 2014-15 2015-16 2015-16 2016-17 2016-17
PKR m % PKR m % PKR m % PKR m % PKR m % PKR m %
Restated Restated

Net turnover 34,682 100.00 36,268 100.00 38,234 100.00 37,515 100.00 36,954 100.00 41,364 100.00

Cost of sales 30,688 88.49 32,193 88.77 33,582 87.83 31,726 84.57 30,476 82.47 33,598 81.23

Gross profit 3,994 11.51 4,075 11.23 4,652 12.17 5,790 15.43 6,479 17.53 7,765 18.77

Selling & distribution


expenses 1,069 3.08 1,052 2.90 1,530 4.00 1,782 4.75 2,118 5.73 2,607 6.30

Administration &
general expenses 1,300 3.75 1,036 2.86 896 2.34 964 2.57 882 2.39 1,115 2.70

Operating result 1,625 4.68 1,987 5.48 2,226 5.82 3,044 8.11 3,479 9.41 4,044 9.78

Finance Cost 294 0.85 311 0.86 387 1.01 403 1.07 383 1.04 398 0.96

Other charges 133 0.38 151 0.42 181 0.47 231 0.62 285 0.77 144 0.35

Other income 298 0.86 225 0.62 323 0.85 294 0.78 688 1.86 893 2.16

Profit before taxation 1,496 4.31 1,749 4.82 1,981 5.18 2,703 7.21 3,498 9.47 4,394 10.62

Taxation 523 1.51 591 1.63 279 0.73 578 1.54 655 1.77 1,098 2.66

Profit after taxation 974 2.81 1,159 3.19 1,702 4.45 2,126 5.67 2,843 7.69 3,296 7.97

Horizontal Analysis

Jan to Dec July to June


2012 2012 2012-13 2012-13 2013-14 2013-14 2014-15 2014-15 2015-16 2015-16 2016-17 2016-17
PKR m % PKR m % PKR m % PKR m % PKR m % PKR m %
Restated Restated

Net turnover 34,682 -2.35 36,268 4.57 38,234 5.42 37,515 -1.88 36,954 -1.50 41,364 11.93

Cost of sales 30,688 -0.72 32,193 4.90 33,582 4.31 31,726 -5.53 30,476 -3.94 33,598 10.25

Gross profit 3,994 -13.30 4,075 2.03 4,652 14.17 5,790 24.46 6,479 11.90 7,765 19.86

Selling & distribution


expenses 1,069 5.50 1,052 -1.57 1,530 45.50 1,782 16.45 2,118 18.86 2,607 23.08

Administration &
general expenses 1,300 7.04 1,036 -20.32 896 -13.56 964 7.59 882 -8.51 1,115 26.44

Operating result 1,625 -31.69 1,987 22.29 2,226 12.04 3,044 36.76 3,479 14.28 4,044 16.24

Finance Cost 294 12.74 311 5.81 387 24.35 403 4.07 383 -4.84 398 3.86

Other charges 133 -35.82 151 14.12 181 19.62 231 27.79 285 23.11 144 -49.51

Other income 298 -22.25 225 -24.57 323 43.57 294 -9.16 688 134.27 893 29.81

Profit before taxation 1,496 -34.80 1,749 16.91 1,981 13.25 2,703 36.47 3,498 29.40 4,394 25.62

Taxation 523 -31.53 591 13.00 279 -52.79 578 107.28 655 13.38 1,098 67.66

Profit after taxation 974 -36.42 1,159 19.00 1,702 46.91 2,126 24.88 2,843 33.75 3,296 15.93
ICI Pakistan Limited Annual Report 2016 -17 31

Profit and Loss Analysis


(Income)
(%)

2016-17

2015-16

2014-15

2013-14

2012-13

2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Net turnover Other income

Profit and Loss Analysis


(Expenses)
(%)

2016-17

2015-16

2014-15

2013-14

2012-13

2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cost of sales Selling and distribution expenses Administration and general expenses Finance cost Other charges Taxation

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
32 ICI Pakistan Limited Annual Report 2016 -17

Balance Sheet
Vertical Analysis
Jan to Dec July to June
2012 2012 2012-13 2012-13 2013-14 2013-14 2014-15 2014-15 2015-16 2015-16 2016-17 2016-17
PKR m % PKR m % PKR m % PKR m % PKR m % PKR m %
Restated Restated

Total equity and


revaluation reserve 9,766 47 10,488 50 11,877 52 13,294 50 15,246 50 16,928 47

Non current liability 1,593 8 3,068 15 3,486 15 2,763 10 5,174 17 6,243 17

Current liability 9,355 45 7,389 35 7,574 33 10,614 40 10,168 33 12,985 36

Total equity and liabilities 20,714 100 20,945 100 22,937 100 26,670 100 30,588 100 36,156 100

Non current assets 10,898 53 11,331 54 12,501 54 15,843 59 18,910 62 22,996 64

Current assets 9,816 47 9,614 46 10,437 46 10,827 41 11,678 38 13,160 36

Total assets 20,714 100 20,945 100 22,937 100 26,670 100 30,588 100 36,156 100

Horizontal Analysis

Jan to Dec July to June


2012 2012 2012-13 2012-13 2013-14 2013-14 2014-15 2014-15 2015-16 2015-16 2016-17 2016-17
PKR m % PKR m % PKR m % PKR m % PKR m % PKR m %
Restated Restated
Total equity and
revaluation reserve 9,766 -1 10,488 7 11,877 13 13,294 12 15,246 15 16,928 11

Non current liability 1,593 19 3,068 93 3,486 14 2,763 -21 5,174 87 6,243 21

Current liability 9,355 1 7,389 -21 7,574 3 10,614 40 10,168 -4 12,985 28

Total equity and liabilities 20,714 1 20,945 1 22,937 10 26,670 16 30,588 15 36,156 18

Non current assets 10,898 19 11,331 4 12,501 10 15,843 27 18,910 19 22,996 22

Current assets 9,816 -14 9,614 -2 10,437 9 10,827 4 11,678 8 13,160 13

Total assets 20,714 1 20,945 1 22,937 10 26,670 16 30,588 15 36,156 18


ICI Pakistan Limited Annual Report 2016 -17 33

Balance Sheet Analysis


(Assets)
(%)

2016-17

2015-16

2014-15

2013-14

2012-13

2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Property plant and equipment Intangible assets Long-term investments Other non-current assets Current assets

Balance Sheet Analysis


(Equity and Liabilities)
(%)

2016-17

2015-16

2014-15

2013-14

2012-13

2012

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Equity Long-term loans Other non-current liabilities Short-term borrowing and running finance Other current liabilities

2012 and 2012-13 numbers have been restated due to IAS 19 revision
Year 2012-13 is based on twelve months performance for a meaningful comparison
34 ICI Pakistan Limited Annual Report 2016 -17

Quarterly
Analysis In PKR '000

Net Turnover Cost of Sales Operating Result Profit After Capital


Taxation Expenditure
Quarter 1 9,254,775 7,561,180 870,705 616,657 422,050

Quarter 2 10,382,744 8,438,821 1,062,948 919,177 838,965

Quarter 3 10,606,539 8,601,238 1,063,515 860,177 1,033,375

Quarter 4 11,119,637 8,996,981 1,046,408 900,080 2,505,762

41,363,695 33,598,220 4,043,576 3,296,091 4,800,152

Analysis of Variation in Interim Results costs to only 1%. The highest quarterly profit after taxation
with Final Accounts for the year, amounting to PKR 919 million was achieved in
Quarter 2, and was mainly attributable to higher operating
In the first quarter of 2016-17, the Company’s operating result results, as well as dividend income of PKR 160 million from
was PKR 870 million. This increased over the subsequent NutriCo Pakistan (Private) Limited and PKR 125 million from
quarters to PKR 4,044 million for the full year. The highest ICI Pakistan PowerGen Limited. Profit after taxation was
quarterly operating result for the year was achieved in Quarter 15% higher in the second half of the year, mainly due to an
3, amounting to PKR 1,064 million. This was primarily due to improved operating result and further dividend income of
improved performances in the Polyester, Life Sciences and PKR 388 million from NutriCo Pakistan (Private) Limited.
Chemicals Businesses. The Chemicals Business showed Higher operating results in each quarter, coupled with a
54% growth due to an increase in net turnover, as well as cost higher dividend income in the first half of the year, translated
efficiencies initiatives. The Polyester Business reduced its into profit after taxation of PKR 3,296 million for the year with
operating loss by 31% due to effective cost control initiatives an EPS of PKR 35.69.
and robust monitoring, which limited the increase in fixed

100%

27% 27% 26% 27%


80%
52%

60% 26% 26% 26% 26%

40% 22%
25% 25% 26%
28%

20% 17%

22% 22% 22%


19%
9%
0%
Net turnover Cost of sales Operating result Profit after taxation Capital expenditure

Quarter 1 Quarter 2 Quarter 3 Quarter 4


ICI Pakistan Limited Annual Report 2016 -17 35

Net Turnover Cost of Sales Operating Results Profit After Taxation

Quarter 1

Higher by 9% compared to the same period last Increased by 7% as 24% higher as compared PAT is 30% higher as
year (SPLY), primarily due to higher revenues compared to SPLY, which to SPLY due to improved compared to SPLY due to
in the Life Sciences Business, which increased is lower than the increase in performances in the better operating results,
by 37%, with double digit growth in the Animal net turnover. The Polyester Polyester and Life Sciences higher dividend income
Health and Agri Divisions. The Animal Health plant’s energy requirements Businesses. The Polyester of PKR 120 million from
Division managed to double its sales as were primarily met by an Business’s operating loss Associate and lower
compared to SPLY crossing the PKR 1 billion energy mix of gas and was reduced by 72% due exchange losses.
mark in the first quarter for the very first time. furnace oil instead of coal, to robust control over fixed
which helped achieve an costs and lower energy
Further, net turnover of Chemicals Business 11% saving in unit energy costs. The Life Sciences
was higher by 4% compared to SPLY due to costs as compared to SPLY. Business showed a 40%
improved performances in the Polyurethanes increase due to strong
and Specialty Chemicals Divisions. performances in the Animal
Health and Agri Divisions.
The Soda Ash Business remained 1% lower
as compared to SPLY due to higher discounts The Soda Ash Business
offered to customers in spite of higher sales remained 14% lower than
volumes by 5%. SPLY due to decreased net
turnover coupled with higher
depreciation charges.

Quarter 2

Higher by 9% compared to SPLY, due to higher As opposed to coal-based Operating result was 12.5% PAT was 23% higher
revenues across all Businesses. The Chemicals energy, the energy mix of higher compared to SPLY. compared to SPLY due to
Business showed 11% growth as compared to gas and furnace oil proved The Polyester Business better operating results,
SPLY, majorly due to the Polyurethanes Division, to be the most cost-efficient showed a 48% reduction dividend income of PKR
while Specialty Chemicals showed improved option due to lower crude in operating loss due to 125 million and PKR 160
performances due to the Crops and Adhesive oil prices and a continous lower cost of sales, cost million from ICI Pakistan
Segments. supply of gas to the rationalisation initiatives PowerGen Limited and
industry. and improved domestic NutriCo Pakistan (Private)
The Polyester Business posted 10% growth margins. The Chemicals Limited respectively,
as compared to SPLY on account of improved Business showed a 25% and exchange gains as
margins due to anti-dumping duty being levied growth on account of compared to SPLY.
on Chinese PSF, along with improved prices. increasing market share,
stronger relationships with
The Life Sciences Business delivered a growth customers, and a continued
of 9% as compared to SPLY, mainly due to focus on cost efficiencies.
strong performances by the Pharmaceuticals
and Animal Health Divisions, with both Divisions
posting double digit growth. Net turnover in the
Soda Ash Business grew by 3% on account of
higher sales volumes in the domestic market.

Quarter 3

Increased by 15% compared to SPLY. The Crude oil prices remained Operating result was 23% PAT was 19% higher
Chemicals Business improved by 38% mainly range-bound in the third higher compared to the compared to SPLY due
due to the Polyurethanes segment, Industiral quarter. Greater trading SPLY. The Chemicals to better operating results,
Chemicals segment and Crops and Adhesives on commodity markets Business showed 54% higher dividend income
segments. The Life Sciences Business showed drove raw material prices growth due to an increase of PKR 224 million from
an improvement of 26% due to double digit up, with PTA and MEG in net turnover and cost NutriCo Pakistan (Pvt.)
growth in all three division of the Business. Soda prices rising by 5% and efficiencies initiatives. The Limited and lower exchange
Ash Business showed a 2% growth due to 12% respectively. However, Polyester Business reduced losses as compared to
higher sales volumes in the domestic market continuous supply of gas its operating loss by 31% SPLY.
along with low oil prices due to effective cost control
provided cost-effective initiatives and robust
energy. monitoring, which limited
the increase in fixed costs to
only 1%.

Quarter 4

Increased by 15% compared to SPLY, with a Increased in line with sales Operating result was 8% PAT is 11% higher as
45% increase in the Life Sciences Business as compared to SPLY. higher than SPLY due to compared to SPLY mainly
due to double digit growth across all categories 24% and 27% growth in the due to better operating
through new partnerships and improved Life Sciences and Chemcials result and higher dividend
performances of Somatech, Vegetable Seeds Businesses respectively, and income of PKR 164 million
and Agrochemicals portfolios. The Chemicals 27% reduction in operating from NutriCo Pakistan (Pvt.)
Business showed 19% growth, mainly due loss of the Polyester Limited.
to the Polyurethanes Division. The Soda Ash Business partially offset by
Business and Polyester Business achieved 3% a 6% reduction in the Soda
and 5% growth respectively. Ash Business. Growth in
the Chemicals Business
was mainly due to higher
sales volumes, an expanded
customer base and cost
efficiency initiatives.
36 ICI Pakistan Limited Annual Report 2016 -17

DuPont Analysis
DuPont Analysis 2016-17 2015-16

Tax burden 24.99% 18.73%

Interest burden 8.31% 9.87%

Operating result margin 9.78% times 9.41% times

Asset turnover 1.144 1.208

Gearing 34.32% 28.07%

Return on equity 19.47% 18.65%

and ventures, capital expenditure and working capital funding


Commentary on DuPont Analysis requirements. This is due to the reduction in interest rates
Profit after tax amounting to PKR 3,296 million is 16% higher and keen negotiations with banks, along with lower exchange
than the same period last year (SPLY). This is principally losses. Total assets of the Company witnessed an increase of
due to a 16% increase in operating results with improved 18% due to capital expenditure on the Soda Ash expansion
performances in the Polyester, Life Sciences and Chemicals project of 75 KTPA and investments in Cirin Pharmaceuticals
Businesses, driven through expansion of the product range, (Private) Limited and NutriCo Morinaga (Private) Limited.
customer engagement programmes and cost efficiencies.
Other income increased due to higher dividend income of PKR Ownership ratio reduced by 3% as compared to SPLY due to
668 million from NutriCo Pakistan (Private) Limited (Associate) a higher increase in total assets as compared to total equity.
as compared to PKR 458 million in the previous year. Financial Owner’s equity increased due to enhanced un-appropriated
charges showed a marginal increase of 3%, despite higher profit partially offset by dividends paid during the year. As a result
long-term loans and short-term financing facilities availed by the return on equity of the Company was recorded at 19.47%
the Company from various banks to manage new acqusitions compared to 18.65% reported in the previous year.

Raw material
consumption
17,842m
Net Sales
Net Profit 41,364m
3,296m Salaries, wages &
benefits
Net Profit Margin 3,079m
7.97%
Total Cost
38,068m
Net Turnover
Return on Assets 41,364m Depreciation &
9.12% Amortization
2,224m
Asset Turnover Current Assets
1.144 times 13,160m
Total Assets
36,156m Taxes
1,098m

Non-Current Assets
Owner’s Equity 22,996m
16,928m
Return on equity
19.47% Interest
398m
Total Liabilities
19,228m Current Liabilities
12,985m

Other Costs
Ownership Ratio 13,426m
46.82%
Non-Current
Liabilities
6,243m
Total Assets Owners Equity
36,156 16,928m
ICI Pakistan Limited Annual Report 2016 -17 37

Share Price Sensitivity


Analysis
Share price senstivity
60,000 1400

55,000
1200
50,000
1000
KSE 100 Index (points)

45,000

ICI Share Price


40,000 800

35,000 600

30,000
400
25,000
200
20,000

15,000 0
Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

KSE 100 Index ICI Pakistan Limited share price

During the financial year ended June 30, 2017, ICI Pakistan newly incorporated subsidiary under the name of NutriCo
Limited outperformed the KSE 100 Index, and its share price Morinaga (Private) Limited, in which ICI Pakistan Limited has
increased from PKR 445.02 to PKR 1094.55 giving a massive majority shareholding of 51% with remaining shareholding
price return of 146% as compared to the KSE 100 Index return divided equally between Morinaga Milk Industry Company
which increased by 23%. During the year, the Company reported Limited of Japan and UniBrands (Private) Limited. The Board
profit after tax (PAT) of PKR 3,296 million translating into an EPS of Directors also approved the acquisition of a Wyeth-owned
of PKR 35.69, which is 16% higher as compared to SPLY, due to manufacturing facility from Wyeth Pakistan Limited along with
various initiatives taken by the Company. certain brands and registrations of Wyeth Pakistan Limited and
Pfizer Pakistan Limited. Regulatory formalities for completion
A few of the factors that boosted investors’ confidence and of this transaction are under way. These expansionary projects
interest are: will further strengthen the Company’s position to leverage the
opportunities present in Pakistan.
1) Heavy Capital Expenditure:
ICI Pakistan Limited continues to make strides in fulfilling its 3) Improved performance:
brand promise Cultivating Growth. The steam turbine was The Company reported operating profit for the year of PKR
successfully commissioned in the Soda Ash Business and 4,044 million, which is 16% higher than SPLY with notable
the plant operated on a single power source for the first time growth in the Polyester, Life Sciences and Chemicals
in its history. The Soda Ash expansion project of 75 KTPA Businesses. The financial performance of the Polyester
is progressing as per plan and is expected to come online Business improved significantly due to better margins and
during the third quarter of FY 2018. cost efficiencies, which has improved operating results
of the Business by 49%. Besides, all Divisions of the Life
2) Diversification in new Business: Sciences Business reached their highest annual net turnover,
In order to make consistent progress towards the Company’s registering double-digit growth across all categories.
strategic growth ambitions, the Company ventured into
various expansionary and diversifying projects. The Company 4) Ownership by Yunus Brother Group (YBG):
successfully acquired and integrated Cirin Pharmaceuticals The acquisition of ICI Pakistan Limited by YBG in December
(Private) Limited as a wholly owned subsidiary which provides a 2012 has enhanced the prospects of the Company. While
diverse product portfolio along with manufacturing capabilities making progress towards continuing growth the share price
to the Life Sciences Business for its Pharmaceuticals segment. has increased by 544% since the acquisition, taking annual
During the year, the Company also executed a shareholders growth rate (CAGR) to 51%, which clearly indicates the trust
agreement for the establishment of a state-of-the-art facility and confidence of investors. YBG will continue to build upon
to manufacture Morinaga infant formula along with the the legacy of what is one of Pakistan’s leading groups today
distribution, marketing and sale of these products. This project, and endeavour to continue gaining momentum in the years to
which is currently in progress, is being pursued through a come.
38 ICI Pakistan Limited Annual Report 2016 -17

Year in
Review 2016-17

Q1 Q2
July – September 2016 October – December 2016

April 18 Relaunch of the Chief Executive’s October 7 ICI Pakistan Limited receives awards for its
Best HSE&S Initiative Award Annual and Sustainability Report 2014-15,
at the ‘ICAP & ICMAP Best Corporate and
July 27 ICI Pakistan Limited partners with Sustainability Report Awards 2015’ ceremony
Cogent Breeding Ltd, UK, to break
new ground in the Pakistan livestock October 19 The Soda Ash Business commissions a new
industry with artificial insemination power plant. Subsequently, the entire Soda
products Ash plant would begin operation on a single
power source for the first time in history
August 13 Board of Directors Meeting
October 25 Annual General Meeting (AGM)
August 30 Board of Directors Meeting
October 25 Board of Directors Meeting
September 27 ICI Pakistan Limited announces
it is set to establish the first November 14 Dispatch of Final Cash Dividend Warrants
ever Morinaga infant formula
manufacturing facility in Pakistan, November 16 Launch of premium international skincare
subject to regulatory approval, with brand, Repavar by the Life Sciences
51% equity stake Business, Pharmaceuticals Division

December 5 ICI Pakistan Limited launches official social


media presence, on Facebook

December 21 WWF Green Office certification achieved by


the Head Office premises

December 23 ICI Pakistan Limited successfully concludes


acquisition of Cirin Pharmaceuticals (Private)
Limited
ICI Pakistan Limited Annual Report 2016 -17 39

Q3 Q4
January – March 2017 April – June 2017

January 3 Corporate HSE Department launches April 20 Extraordinary General Meeting (EoGM)
the third version of the Company’s Crisis
Management Plan
April 20 Election of Directors
January 17 Agreements are signed with Morinaga Milk
Industry Company Limited and Unibrands April 20 Board of Directors Meeting
(Private) Limited to establish the first ever
Morinaga infant formula manufacturing facility in
April 20-24 Polyester Customer Conference takes place in
Pakistan, along with distribution, marketing and
sale of such locally manufactured products the Baltic region

January 23 Relaunch of the state-of-the-art April 27 MoU signed with USAID-funded Sindh
Environmental Performance Management Community Mobilization Program for the
(EPM) Database
provision of in-kind and technical support at
January 24 Board of Directors Meeting the Government Girls Secondary School, Wali
Muhammad Haji Yaqoob in Lyari Town, Karachi
February 27 HR Graduate Recruitment Drive: Race to the
Boardroom
May 19 ICI Pakistan Limited inaugurates a science lab
March 3 Board of Directors of ICI Pakistan Limited at the Govt. Girls Middle School, Brarkot under
approve the acquisition of certain assets of the Ilm-o-Hunar Programme
Wyeth Pakistan Limited
May 19 The year’s ‘iMPOWER Employee Engagement
March 6 Joint venture company NutriCo Morinaga
Survey is initiated in partnership with Gallup,
(Private) Limited is incorporated
with a record high score achieved
March 7 Dispatch of Interim Cash Dividend Warrants
May 22 ICI Pakistan Limited signs agreements for the
March 8 Soda Ash Business holds Customer
acquisition of certain assets of Wyeth Pakistan
Conference in Australia
Limited
March 9 Launch of SOVIR and its introduction at the
33rd PSG Annual Congress May 22 Board of Directors Meeting

March 23-27 Life Sciences Annual Business Conference


takes place in Thailand May 25 Board of Directors Meeting

March 29 ICI Pakistan Limited is awarded the


W-Corporates Enlistment Award by Women
on Board Pakistan
40 ICI Pakistan Limited Annual Report 2016 -17

Abid Ganatra (Executive Director & CFO) accepted the award for second place in the Best Sustainability Report Award category at the
ICAP and ICMAP Best Corporate and Sustainability Report Awards.
ICI Pakistan Limited Annual Report 2016 -17 41

Awards and
Achievements
ICAP & ICMAP Best Corporate and 2017, the Company was honoured with the W-Corporates
Sustainability Awards 2015 Enlistment Award by Women on Board Pakistan, at a gong
The Institute of Chartered Accountants of Pakistan (ICAP) and ceremony held at the Pakistan Stock Exchange.
the Institute of Cost & Management Accountants of Pakistan
(ICMAP) annually hold the Best Corporate Report (BCR) The Women on Board (WOB) Pakistan initiative aims to
Award to recognise excellence in corporate and sustainability promote and acknowledge greater gender diversity on
reports. It encourages responsible reporting by companies to boards across listed corporate entities in Pakistan. The
the community both as employers and corporate citizens. recent findings of a survey carried out by WOB showed that
only 4% of total listed companies in Pakistan have appointed
ICI Pakistan Limited has consistently won numerous awards independent woman directors on their Boards.
at these ceremonies, and in October 2016 the Company
won two awards for its Annual Report for the financial year While we still have a long way to go in this area as a nation, at
2014-15. This is a significant achievement for the Company ICI Pakistan Limited we remain committed to our pledge for
considering the diverse competition nominated at the awards. increased gender diversity across all levels of the Company.

ICI Pakistan Limited won fifth place in the category for the WWF Green Office Certification
“Best Corporate Report Award 2015” in the Chemicals The WWF Green Office initiative is a practical environmental
Sector, and second place for the “Best Sustainability Report programme that aims to reduce the ecological footprint of
Award 2015.” corporate offices. The programme also potentially benefits
organisations by helping them achieve cost savings.
These awards underscore our Company’s focus on
effectively communicating financial and business information After carrying out an audit of our Head Office premises,
comprehensively and transparently. WWF Pakistan granted ICI Pakistan Limited the Green
Office certification in December 2016. Our Head Office
W-Corporates Enlistment Award in Karachi is now a certified WWF Green Office, and we
As an employer of choice that promotes equality and continue as before to do our part to reduce our burden on the
diversity, ICI Pakistan Limited has been at the forefront in environment and achieve energy and material savings.
bringing positive changes to the industry. And On March 29,

Kamila Khan (General Counsel, Company Secretary and Head of Corporate Communications & Public Affairs received the Women on
Board (WoB) award on behalf of ICI Pakistan Limited.
42 ICI Pakistan Limited Annual Report 2016 -17

Human Resources

Focussing on the
Future of Talent
Our story of growth is a testament to our commitment to investing in our
people, who are driven to continuously evolve and innovate. Our legacy is
built on the strength of our Businesses, the passion of our people, and the
excellence of our culture, along with our unwavering ambition to
constantly grow.
We strongly believe that delivery of our strategic growth Diversifying Growth
ambitions is contingent on the quality of our people. The diverse and ever-growing nature of our Businesses
Therefore, we remain determined in our unrelenting pursuit and Functions allow us to provide invaluable learning and
of attracting, developing and retaining the best talent while development experiences. We’ve developed and facilitated
cultivating an enabling environment conducive to innovation cross-Functional and cross-Business movements, to give
and high performance; transforming our people into leaders our people a more diverse, well-rounded experience with the
of tomorrow. Company. These movements remain our strategic priority for

The Graduate Recruits were taken to Nathia Gali as part of their induction programme.
ICI Pakistan Limited Annual Report 2016 -17 43

In Karachi, the Women’s Day Exhibition showcased eight brilliant Ladies Welfare Centre students with the female colleagues
women entrepreneurs; each exhibited a diverse range of hand- came together for a group photograph after the certificate
made products. distribution ceremony concluded at the Mozang Office.

diversifying growth, a fact that is evident from the remarkable Hiring for the Future
21% talent movement achieved during the year. Innovation is a core value that drives the way we work and
grow as a Company. We hire for the future, therefore we aim
to constantly build a compelling Employee Value Proposition
The Power of Engagement in order to attract tomorrow’s leaders today.
As we continue to build on our brand promise of Cultivating
Growth, employee engagement remains vital. We strongly This year, our revamped Graduate Recruitment Drive, Race
believe that success is made possible when employees to the Boardroom, was an innovative recruitment experience
are engaged and aligned with the Company’s vision, and designed to appeal to millennials. An online game presenting
when they feel valued and heard. This year, for the third various scenarios depicting a real work environment, Race
year running, we remained committed to driving employee to the Boardroom transformed the Graduate Recruitment
engagement across our Company through our ‘IMPOWER process into a fun and challenging experience.
programme. Under this programme, we have partnered
with Gallup to administer their renowned Q12 employee Our overall talent acquisition efforts helped us further
engagement survey. Starting out in 2015 at the 35th strengthen our talent pipeline, through the recruitment of 29
percentile with a score of 3.87 (on a 5 point scale), in 2017, graduates (including 11 Graduate Recruits) from reputable
we now stand at an impressive 68th percentile with a score institutes, and 243 experienced professionals.
of 4.30. This score is well ahead of Gallup’s recommended
trajectory and was made possible due to various Company-
wide and local level initiatives, which were undertaken after The Talent Factor
each survey, as part of an action planning process. This We know that a well-defined talent management framework
significant yearly increase reflects our people’s interest and is necessary to build a healthy and sustainable talent pipeline.
confidence in our collective future, and brings us closer to our This involves Capability Groups, Leadership Talent Reviews
target of achieving world-class engagement levels. Events and Succession Planning Forums to identify capability and
held through the year to sustain the spirit of engagement talent gaps and build comprehensive plans to address these.
included Mothers’ Day at Work, Kids’ Day at Work, and a When these plans are put in place, we are better equipped
Futsal tournament. A state-of-the-art gym facility was also to address talent issues more effectively, while building on
inaugurated at the Head Office to enhance employees’ organisational capability and succession for the future. In
wellbeing. 2016-17 we completed our talent management cycle by
conducting several meetings of our functional Capability
Groups along with the annual Succession Planning Forum.
44 ICI Pakistan Limited Annual Report 2016 -17

The state-of-the-art gym facility at the Karachi Head Office. Our HR for Non HR Managers programme in progress.

This year, our flagship HR for Non HR Managers programme


Learning to Lead continued, with an additional 69 managers participating. This
Given the range of our Businesses and Functions we consider programme was developed in order to help people managers
ourselves to be an excellent organisation for learning and better understand the HR aspect of their roles. The Core
development. At ICI Pakistan Limited, we strive to provide our Development Programme for engineers continued with a
people with diverse learning and developmental opportunities renewed focus, training 64 managers, while functional and
to ensure an all-encompassing approach to capability building. managerial trainings progressed as per the training needs
Our well-integrated and structured learning framework includes assessment. A total of 33,036 man-hours were invested in
Essentials, Annual Learning Plans based on Training Needs employee training, focussing on functional and leadership
Assessment (TNA), Core Development Programme (CDP) development, which translated into an increase of 17% over the
as well as our flagship Leadership Development Roadmap same period last year.
(LDRM). Our learning philosophy is based on the 70:20:10
learning model (where 70% accounts for on the job training, Along with well-structured training interventions, our
20% for coaching and mentoring experiences, and 10% for employees are also exposed to exciting on the job learnings,
formal training). Through this philosophy, we’ve ensured a challenging project work, networking opportunities and
strong focus on building functional, managerial and leadership external professional forums to fast track their career growth.
competencies at all levels.
Furthermore, we have formally devised a voluntary mentoring
Our Leadership Development Roadmap continues to be a programme, RISE, which serves as a powerful platform for
key ingredient in building the capabilities of our employees. dialogue through networking and mentoring. RISE allows
Through it we are providing them with a structured and people to connect with mentors who can offer them fresh
integrated talent development framework. And we’ve perspectives, valuable advice and coaching, all in order to
achieved this with customised training modules, executive achieve long-term personal and professional goals.
coaching sessions and learning projects, in which more than
886 managers participated throughout the year.

Kids’ Day at work at the Karachi Head Office, December 2016.


ICI Pakistan Limited Annual Report 2016 -17 45

Fathema Zuberi (GM HR), opened the Women’s Day celebration Corporate HR invited mothers of our colleagues to celebrate
event. Mother’s Day at the Karachi Head Office.

The Performance Leap The Gender Diversity ‘iMPACT


With a relentless drive to grow, innovate and excel, we We consider gender diversity a strategic ambition that will help us
maintain our commitment to our people. Their determination build a sustainable competitive advantage. ‘iMPACT, our gender
for excellence and results drives us to continuously improve diversity forum, continues to further this aspiration across the
the way we work and grow our business. organisation, through focussed gender supportive initiatives.

We place significant emphasis on performance as well as the This year on International Women’s Day, we organised an
means used to achieve it. In order to assess it against targets event to appreciate all the women working at ICI Pakistan
and objectives, we have a comprehensive measurement Limited. During the event we also recognised talented
system in place that acts as a barometer for the Company’s craftswomen from diverse backgrounds, for their courage,
performance. This is the Performance and Development hard work and determination against all odds. The event
Discussion (P&DD) process, and it continues to be an comprised an interactive and inspiring session, followed by
essential tool in providing constructive and regular feedback an exhibition of hand-made items made by the craftswomen.
to managers. It also allows them to align their performance This exhibition received a very positive response from our
and development with their respective Business’s or colleagues, who appreciated the efforts of the entrepreneurs.
Function’s strategy, as well as our Company’s strategy. During
the year under review, our P&DD process was concluded as Building on our Legacy, with a
per guidelines, and helped ensure employees continue to Difference
benefit from clear and credible feedback and assessment.
We are rated amongst the top preferred employers in the
Embracing Digitalisation country. We are bold and resilient in the face of challenges,
and have the confidence to pursue growth in unfamiliar
We focus on not only hiring the best people, but also and rewarding areas. We possess an ever growing urge to
providing them with the latest technology to better equip think differently and innovate. Our aim is to continue seizing
them for their work. In our pursuit of innovation and greater opportunities by nurturing a dynamic and passionate
technology, we have successfully initiated the implementation workforce, who look forward to a future in which they lead.
of the globally recognised SAP SuccessFactors Talent
Management Suite. Once completed, SAP SuccessFactors
will digitalise our major HR processes and activities
including recruitment, on-boarding, learning, performance
management, succession, as well as compensation and
benefits.
46 ICI Pakistan Limited Annual Report 2016 -17

Information Technology

Enabling Business Innovation


through Technology
In an increasingly competitive and dynamic world, our goal is to embrace
change and strive for continuous innovation. Our IT team is a well-balanced
mix of experienced professionals and younger colleagues, each committed to
implementing the best practices in a modern world.
We adhere to our Corporate IT Vision in all our information Analytics with SAP Business Objects
technology-related endeavours: To act as an effective business In-house implementation of SAP Business Objects was
enabler, ensuring visibility and compliance through innovative carried out, and new dashboards were developed for
and sustainable information solutions, and by embracing the members of our Executive Management Team (EMT).
best infrastructure and technology. Continuous development with SAP Business Objects
has made our dashboards more accessible over tablets,
Highlights of the year 2016-2017 improved performance speed and provided business users
with a more user-friendly interface to view Key Performance
Launch of SAP Fiori Applications: Indicators (KPIs) and drilldowns.
Revolutionising Purchasing Approvals
We successfully launched applications from the SAP Fiori Integration with Standard Chartered Bank
framework across ICI Pakistan Limited to introduce quicker using S2B
and more convenient approvals for purchase orders and A project was initiated in collaboration with Standard Chartered
requisitions. SAP Fiori utilises an intuitive interface and Bank (SCB), in which we established host-to-host connectivity.
responsive design to provide easy, efficient access to purchase This essentially means that through SAP we will be able to
requisite and purchase order (PR/PO) approvals on a range of directly communicate with SCB’s servers for procedures
devices such as mobile, tablet and PC, across all networks. such as processing requests for cheques, pay orders, IBFT
Moving forward, our Corporate IT department plans to and bank transfers. These requests will be verified pending
continue these innovative practices and implement more SAP an online approval process. This will result in a multitude of
Fiori applications to facilitate SAP approvals, and improve the benefits including reduced processing times, significant cost
user experience. reduction and fewer printed documents.

The Corporate IT team hiked to Siri Paye during their yearly IT Conference.
ICI Pakistan Limited Annual Report 2016 -17 47

The Corporate IT team observed October 2016 as security The team gathered for a group photograph during the IT
awareness month and conducted sessions in Karachi and Conference at the Kunhar Riverside, Khanian Kaghan Valley.
Lahore on the importance of cyber security.

Smart Inventory Management in the Chemicals as well as our internal audit team. These aforementioned
Business scenarios were tested for the first time in ICI Pakistan Limited’s
For the Chemicals Business, inventory optimisation and control history and act as a source which confirms the availability of
were identified as key areas of improvement. In order to enable interrupted IT services even in case of a setback at our main
effective inventory management, we initiated a project to utilise data centre or any other major site.
barcodes and automate the handling of material issuances,
receipts and dispatches. The project ensured all materials were ICI Pakistan Limited Technology Risk
fully tracked through all processes, providing better visibility Assessment Exercise
and establishing monitoring controls for the Supply Chain For the first time, our team successfully carried out a
department. technology risk assessment exercise at ICI Pakistan Limited
to assess and benchmark the strength of IT Security Control’s
Operator Driven Reliability in the Polyester preventive and detective measures. The exercise also served
Business to record findings and follow best business practices. It
Smooth running of our plant and its systems is critical comprised of three main activities including IT external
for production at our Polyester Business, and ensuring penetration testing, internal penetration testing, and a network
full functionality and availability of all systems is a major configuration review exercise.
requirement. To help enhance these systems, we carried out a
number of improvements including: Deep Scan Reverification
Following the findings of the Technology Risk Assessment,
• Enabling regular machine logging and monitoring this exercise was conducted to complete necessary
• Equipment tagging with unique barcode IDs implementations to ensure any remaining gaps were
• Daily automated operator rounds through barcode- addressed, and globally accepted best business practices are
enabled handheld devices followed. Later a deep scan reverification was also conducted
• Centralised management reporting against limits and to ensure that all identified gaps, if any, were addressed
defined specifications properly by the corresponding implementations.

SAP SuccessFactors Talent Management in HR IT Security Awareness Sessions at Lahore and


Our implementation of the SAP SuccessFactors Talent Karachi Head Office
Management Suite in Human Resources began earlier this The importance of IT security is paramount, considering the
year. This market-leading, cloud-based talent solution will rising scale of web usage and the proliferation of threats.
significantly enhance ICI Pakistan Limited’s HR processes, and These threats are continually evolving and we must protect our
will provide a better outlook on recruitment and succession, information assets. Awareness and safe practices alone can
a consolidated portal for all learning avenues, and a uniform deter countless potential threats and risks, in light of which, IT
on-boarding process for new hires. The first two phases of the Security Awareness Sessions were organised by Corporate IT
project have been completed and comprise of modules for and held in our Mozang and Karachi Offices. Through these
learning, on-boarding, recruitment and succession. sessions, we communicated the importance of adopting safe
IT practices and continued to spread awareness about IT
security.
IT Security Operations Updates
IT DR Drill
A successful exercise of the DR Drill was carried out with an Future Outlook
expanded scope as scenarios related to the Internet, Active Using the initiatives carried out in 2016-17 as a springboard,
Directory, Domain, SAP Services and SharePoint based we intend to continue investing in innovative solutions to enable
Applications were thoroughly tested. Evidence was recorded our Businesses and Functions to work smarter and faster
in the presence of an independent observer from KPMG through mobility, automation and digital integration.
48 ICI Pakistan Limited Annual Report 2016 -17

Health, Safety, Environment and Security (HSE&S)

Committed to
Responsible Operations
At ICI Pakistan Limited, HSE&S remains of critical importance to us as we
move ahead into new ventures and new areas of operation. We are committed
to providing a safe working environment for our people, and to operating
responsibly with minimum impact on the planet. In doing so, we work towards
a cleaner world, a safer workplace and high quality manufacturing, in adherence
with global standards.

HSE&S Beliefs and Principles These are the HSE&S Principles that we operate in
Our enduring commitment to the highest standards of accordance with:
health and safety for our employees, customers and
contractors, as well as to the protection of our environment, • Work-related injuries and illnesses are preventable
leads us to abide by a set of HSE&S beliefs and principles. We must endeavour to protect those working at our
In line with these principles, we strive to constantly sites, as well as our business partners and our suppliers,
innovate and improve our HSE&S performance, which is from accidental or deliberate harm, damage or loss. Our
the collective responsibility of every individual, from the target is zero injury.
Executive Management Team right down to each employee.
Accordingly, we must all strive to apply the most stringent • Discover measures to reduce our carbon footprint
HSE&S standards to our work. Reducing our carbon footprint remains a focus for us,
especially as our operations grow. Carbon footprint can be
The Company remains focussed on assessing the minimised through pollution prevention, efficient utilisation/
effectiveness of existing regulatory HSE&S frameworks conservation of energy and other resources including water,
and approaches on an ongoing basis. This helps us ensure and reduction of emissions and waste. Some of these
that our systems are sufficiently robust to safeguard our measures involve the implementation of new technologies
employees and the public against accidents and ill-health. and products.

The Corporate HSE team conducted an HSE&S awareness course in Lahore for employees.
ICI Pakistan Limited Annual Report 2016 -17 49

The Life Sciences Business, as part of their commitment to Saboor Ahmed (Business Manager, Animal Health), talked to
HSE&S, arranged environment and conservation training for the attendees about safe operations, during a session on Plant
employees. Safety.

• Continuous improvement of our HSE&S last year’s Management Audit. With the alignment of local
performance engineering procedures with the corporate engineering
We aim to achieve this through strategic management of procedures in 2016-17, the Chief Executive nominated
HSE&S-related issues, as well as the dedication of our Responsible Executives for each Business and location.
people, and adherence to the highest standards in all The Responsible Executives further nominated individuals
areas of our operations. Monitoring and improving our (Responsible Engineers) for their respective domains relevant
HSE&S performance on an ongoing basis has several to Corporate Engineering Procedure.
benefits; safety and security concerns are highlighted,
while enhanced HSE&S measures provide competitive HSE&S Assurance Process
advantages where business opportunities are concerned. Letter of Assurance
This is the annual process through which the Company checks
• Transparency on compliance to mandatory regulations, corporate standards
We firmly believe our stakeholders have a right to and procedures. This Letter of Assurance is a formal submission
information about our HSE&S performance and our from each Business Head to the Chief Executive of ICI Pakistan
operations as a whole; transparency in this regard Limited, indicating conformance with legislation, standards and
promotes and increases trust and accountability. procedures. It also identifies areas of concern for the Business
and plans for their improvement. The process is carried out
HSE&S Management System annually to ensure full implementation of the ICI Pakistan HSE&S
Management System.
The ICI Pakistan Limited HSE&S Management System comprises
of policies, standards and guidelines that cover all aspects
of the Company’s operations. The system is aligned with the
HSE&S Year in Review 2016-17
internationally recognised Responsible Care Management Health
System (RCMS), ISO 14001:2004 and OHSAS 18001:2007. Hundred percent compliance with Health Assessment (HAPI)
and Work Environment (HYPI) monitoring programmes
During the financial year 2016-17, our Businesses designed resulted in the conclusion of the year with no reportable
their HSE&S plans incorporating recommendations from occupational illness. These programmes include the
regular testing of plant equipment and sites from a health
perspective, as well as monitoring of employee health.
Additionally, health awareness sessions on coronary heart
disease, diabetes, cardiopulmonary resuscitation, active
immunisation against pneumonia, basic lifesaving techniques,
Policy
medical emergency handling and first aid were conducted at
1
our Businesses and locations.
Letter of Standards
Assurance 2 To help sustain the zero illness record, March 2017 was
6 HSE&S
celebrated as Health and Hygiene Awareness month by our
Management
System Life Sciences Business. During this month, 460 employees
Auditing received health and hygiene training during the Annual
Guidelines Business Conference held in Thailand. Weekly fitness
5
3 and hygiene challenges, along with online quizzes helped
Local employees achieve better health and motivation at work.
Procedures
4 Our Soda Ash Business held presentations and
demonstrations on understanding and coping with various
medical conditions including hypertension, malaria and more.
50 ICI Pakistan Limited Annual Report 2016 -17

The attendees during the Accident Investigation workshop. Zafar Farid (Corporate HSE Manager), gave a comprehensive
talk on the investigation of accidents.

Health awareness e-campaigns were also conducted on Total Reportable Injury Rate for Employees & Supervised
a variety of topics including the effects of saturated fats, Contractors
diabetes, and coronary diseases.
2011 0.18

Safety 2012 0.34


While safety remains our utmost priority, we recognise that
2013H1 0
accidents do sometimes happen, and that these provide
an opportunity to review our systems and renew our 2013-14 0.33
commitment to safety. There were a total of four reportable 0.16
2014-15
injuries to employees and supervised contractors, and one
0
reportable injury for independent contractors during the year. 2015-16

2016-17 0 0.44
The Polyester, Soda Ash, Life Sciences and Chemicals
26-Sep-16 Two Pharmaceuticals Division employees were injured
Businesses achieved 10.02, 12.3, 1.05 and 0.27 million man-
in a road accident
hours without injury, respectively.
27-Jan-17 A Chemicals Business employee received burns due to
a splash of high concentrated sulfuric acid
All reported injury cases were thoroughly investigated by
trained personnel, and findings were subsequently circulated 09-Feb-17 A Pharmaceuticals Division employee lost his life when
Companywide. Once investigations were completed, actions the car he was travelling in fell in the River at Pattan
and recommendations were assigned to individuals with a
28-Mar-17 An independent contractor received a cut on his right
strict follow-up system put in place to avoid any recurrence. hand from a cladding sheet

21-Apr-17 A food poisoning incident occurred at the Head Office


A sharper focus on operational discipline and even stricter
adherence to the Company’s Health, Safety, Environment
and Security (HSE&S) Management system and investigation Security
outcomes is being planned for 2017-18 to avoid any future Security remains a central focus in line with our aim
mishaps. of achieving zero harm to our people and assets. A
comprehensive site security review was undertaken,
Environment covering all major sites including our Soda Ash Business
We continued to focus on reducing our Operational Eco site, Polyester Business, Mozang Office, Head Office and
Efficiency (OEE) footprint. The Soda Ash, Polyester and the newly acquired Cirin Pharmaceuticals (Private) Limited
Chemicals Businesses reported compliance with liquid and facilities. The review was carried out in order to assess the
air emissions on NEQS. probability and impact of possible terrorism-related activities,
and to implement safeguards. These anti-terrorism measures
This year, we also relaunched our state-of-the-art also provide other security benefits, including probability and
Environmental Performance Management (EPM) Database. impact reduction from criminal and malicious activities, as
The EPM Database is an application purpose-built to report well as from major natural disasters and serious industrial
on all HSE&S related parameters. Our continued focus on accidents. We utilise modern surveillance techniques to
innovation means modernisation of existing procedures and ensure the security of people and assets at our plant sites
protocols is a big part of what we do; this application makes and offices; these will be further upgraded in the future to
it simpler for our Businesses to report their HSE&S data using ensure we provide maximum security. These security plans
three standardised quarterly datasheets for Health & Safety, will also fall under the Company’s Business Continuity Plan.
Environment and Energy. This sophisticated tool enables the
Corporate HSE Department to consolidate, analyse and report HSE&S Trainings
data. We anticipate that it will support us in our benchmarking A truly safe, secure workplace can only be achieved when
efforts and aid in global competitions going forward. every single employee is well-versed with, and committed
ICI Pakistan Limited Annual Report 2016 -17 51

The audience intently listened to the speaker during the Fayyaz Moazam talked to ICI Pakistan Limited employees
Introduction to Engineering Standard training, conducted in during the Hazard Studies Leadership training, conducted in
Lahore. Lahore for all four Businesses.

to, HSE&S practices and procedures. HSE&S trainings made by each Business to improve HSE&S practices at
are therefore a vital component of our Company’s HSE&S our manufacturing sites and offices. The award consists
Management System. Various facets of occupational of two categories, namely: Manufacturing and Office/
health, safety, risk mitigation, hazard identification, accident Warehouse, to account for the two different types of
investigations, and environment are covered through locations. Each Business can enter up to two submissions
conducted trainings. The following training sessions regarding per category for judging. For this year’s award, all
HSE&S were conducted Companywide through the year: Business HSE Managers presented their submissions after
• HSE&S Awareness Training which they were awarded marks against a pre-agreed
• First Aid Refresher Training 12-point criteria.
• Defensive Driving Training (conducted by the Motorway
Police) Risk Identification through Learning Event
• Permit to Work Trainings Database
• Accident Investigation Workshop The Learning Event Database is a SharePoint-based
• Hazard Study Appreciation and Risk Management application used throughout the Company to record and
report undesirable situations or incidents occurring at our
Specialised Trainings manufacturing sites and offices. These reports are then
Hazard Study Leadership Workshop analysed by Corporate HSE to identify major risk themes, and
In 2016-17 we held specialised trainings on Hazard Studies; a suggest appropriate corrective action. With approximately
mandatory protocol for any new project or major modification 1,500 learning events being raised across Pakistan over the
work undertaken at our Businesses. Comprehensive course of the year 2016-17, we are pleased to report the
technical knowledge and experience is a requirement for Learning Event Database is functioning as a direct reflection
undertaking Hazard Studies, for which a Hazard Study of our HSE&S Management Database, and supporting its
Leader is responsible. implementation as it aids in the improvement of the work
environment and increased safety of our employees. It is worth
In collaboration with PetroRisk, our Corporate HSE noting that our senior management has been instrumental in
Department conducted a five-day Hazard Study Leadership encouraging employees to report their observations via this
Workshop for manufacturing site managers with a minimum tool, resulting in widespread use and better reporting of on-
of seven years’ experience. The comprehensive workshop ground issues.
took participants through each stage of a Hazard Study,
including steps to be taken. It also covered the correct use Procedural Upgradation
of tools and techniques, enabling managers to carry out this In 2016-17, Corporate HSE set out to upgrade vital HSE&S
process successfully. procedures and protocols Companywide. The aim was
to provide all employees with comprehensive supporting
GRI Standards Trainings documents to help them better understand the ICI Pakistan
With the introduction of the newest edition of Global Limited HSE&S Management System.
Reporting Initiative (GRI) Sustainability Reporting Guidelines,
at ICI Pakistan Limited, we took the initiative to be among the Among these documents was an FAQ book providing
first companies in Pakistan to report in accordance with the answers to frequently asked questions regarding our HSE&S
latest GRI Standards. All stakeholders of our sustainability Management System. It includes examples for various
reporting process were accordingly trained and certified scenarios to help aid better understanding.
on the GRI Standards by the Global Reporting Initiative,
Netherlands. Another major milestone achieved was the launch of
HSE-003 Arrangements for Reporting Health, Safety &
Chief Executive’s Best HSE&S Initiative Award Environmental Performance. This document, which also
2016-17 saw the relaunch of the Chief Executive’s Best supports our HSE&S Management System, includes the
HSE&S Initiative Award. This award recognises the efforts following sections:
52 ICI Pakistan Limited Annual Report 2016 -17

In collaboration with 1122 rescue, the Life Sciences Business Matin Amjad (GM, Pharmaceuticals), spoke about the
conducted Emergency Rescue Training for its employees in importance of HSE&S during the Life Sciences Annual Business
Sahiwal. Conference 2016-17.

• Immediate Reporting International Firefighters’ Day


• Injury and Illness Reporting International Firefighters’ Day is celebrated to thank
• Motor Vehicle and Distribution Incident Reporting firefighters the world over for their extraordinary commitment
• Occupational Health Performance Reporting and exceptional courage in the face of life-threatening
• Environmental & Energy Reporting emergencies. We celebrated International Firefighters’ Day
Corporate HSE also launched the third version of our Company’s on May 4, 2017 with all our firefighting staff. Audiences
Crisis Management Plan, which defines management were given an overview of the purpose of the event, and the
responsibilities and actions required for an organised response firefighting squad was commended for their services at our
to any potential HSE&S crisis. Requirements of the Crisis plant and local community.
Management Plan include clear and early identification of World Water Day
situations with crisis potential; structured responses to its World Water Day was celebrated at ICI Pakistan Limited
demands, and a factually accurate process of communication, with senior management communicating the importance of
both within the Company and externally. water management in every walk of life. Special posters with
messages on water management and conservation were
Behaviour Based Safety (BBS) Programme displayed around the residential and works areas.
The primary objective of the BBS Programme is to create a
positive and safe workplace for employees by developing An e-campaign was launched by Corporate HSE with the
positive safety recognition of management and peers 2017 theme of “Why Wastewater” highlighting the adverse
through supportive leadership. The programme continued at effects caused by untreated wastewater being dumped into
regular intervals to identify site employee behaviour and its water systems and how we can treat or reuse this water at
associated impact on safety. our homes and offices.

Events and Special Days Tree Plantation Drive


Earth Day Companywide tree plantation drives were continued through
Earth Day is celebrated globally to raise awareness of, the year encompassing the Polyester, Soda Ash, Life
and appreciation for, our Earth’s life-giving environment Sciences and Chemicals Businesses along with the Head
and resources. Our Soda Ash Business celebrated Earth Office in Karachi.
Day with all safety improvement teams, focussing on the
importance of trees in our natural ecosystem as supporters The Soda Ash Business planted approximately 12,000 trees
of biodiversity and environmental sanctity. The celebrations at the plant site, residential areas, in the community and along
were supplemented with tree plantation activities. the highway. The District Officer Environment and EPA Punjab
Team, along with the senior management of the Soda Ash
Business participated in these activities, demonstrating their
commitment towards a greener future.
ICI Pakistan Limited Annual Report 2016 -17 53

Community Investment

Giving back to our


Communities
At ICI Pakistan Limited, investment in the communities we operate in, and near,
is a strong focus. Our communities support and sustain our operations, both
directly and indirectly. And we know that giving back to them and helping them
develop simply makes good sense in the long run – for them and for us.

Most major community investment and CSR initiatives at ICI Industrial Electrical Wireman Course -
Pakistan Limited are carried out through the ICI Pakistan Vocational Training
Foundation, a registered trust run and managed by a Board In 2015, we initiated a course teaching Basic Household
of Trustees. However, in addition to these corporate level Electrical Wireman skills at our Polyester Business’s Training
initiatives, the Company’s Businesses also carry out more Centre in Sheikhupura. To date, three batches of students
business-specific community and CSR activities. (approximately 45 community youths) have successfully
completed the course.
Guided by our CSR Policy, the Foundation’s initiatives (under
the umbrella of the Hamqadam Programme) focus primarily In 2016-2017, the basic wiring course was upgraded to the
on the following broad areas: education, health, community more advanced, commercially-oriented Industrial Electrical
and environment. Through the Foundation, we also support Wireman course to provide students with even better
civic development through investment in community projects, employment opportunities in the industrial and commercial
disaster relief and rehabilitation activities as needed. sectors. The first batch of 12 students has successfully
completed this course.
Here is an overview of the progress of our community and
CSR projects for 2016-17 Government Boys and Girls Primary School,
Tibbi Hariya – Primary Education Support
This government primary school has been managed by
Education our Polyester Business CSR team in partnership with
Support extended to education-related initiatives a local NGO for 15 years, with 110 students currently
includes primary education support, vocational enrolled. To improve the quality of education and general
training, and higher education support. standards of the school, we recently approached the
CARE Foundation, a reputable non-profit, to take on the
Ladies Welfare Centre (LWC) - Vocational management of the school.
Training
Established in 1973 to empower young women from the An agreement has been reached on this matter, and we
Khewra community by imparting marketable skills, the ICI look forward to working with the CARE Foundation, which is
Pakistan Limited-funded and operated LWC continues to currently running 716 schools with over 230,000 students and
flourish with a new facility that was inaugurated in 2015. 4,000 teaching staff across the country.
Courses currently offered include a year-long comprehensive
course in Domestic Tailoring and Fashion Design (which is Government Boys and Girls Primary School,
aligned with the TEVTA Curriculum) and a year-long course in Kakapir Village – Primary Education Support
Professional Cooking. Our long-term support of this school has included the
2008 renovation of the entire school building, including the
In December 2016, the latest batch of 14 students completed provision of new classroom furniture. Currently over 180
their training and were awarded certificates at a ceremony students are enrolled (nursery to grade five), and significantly,
held on March 31, 2017 at our Mozang Office in Lahore. The 65% of primary students are girls. While this showed a
LWC also offers internships and teacher training programmes. growing acceptance of the need for female education in the
The Centre currently employs five instructors, all of whom community, we observed an emerging issue. As students
are former students of the LWC. At the time of printing of this graduated beyond primary school level, in keeping with
publication, 12 new students had been inducted into the new conservative social norms, parents were reluctant to allow
batch. To date, over 1,200 young women from the Khewra their daughters to attend the nearby co-education secondary
community have benefitted from this training. school. Girls from the Kakapir Village were therefore having
54 ICI Pakistan Limited Annual Report 2016 -17

Basic Household and Industrial Wiring Courses at the Polyester ICI Pakistan Limited and Sindh Community Mobilization Program
Business Site aimed to create skilled workers so that community signed an MoU under the banner of ICI Pakistan Limited’s Ilm-o-
members could engage in economically profitable work. Hunar programme for education-related initiatives.

to give up their studies after the primary level. To resolve Statement of Charity Account
this problem, in 2016-17, we initiated sixth grade classes
for girls at the school in partnership with Literate Pakistan PKR ‘million
Foundation. Currently, 12 female students are enrolled in the
sixth grade at Kakapir School. 2016-2017 2015-2016

Reader’s Club and “Dewaar-e-Sahafat” Project Education 6.06 11.04


Launched at the WRRA Secondary School in Shah
Faisal Colony, Karachi, the Reader’s Club Project was a Health 14.92 11.34
scrapbooking project aimed to get children from lower
income backgrounds interested in reading, and to encourage Environment 3.62 2.00
them to express their thoughts and feelings. About one
hundred students from grades four through ten participated; Others 0.07 -
each student was given a starter pack consisting of a
collection of children’s magazines and newspapers (to Total PKR* 24.67 24.38
serve as source material) and a blank scrapbook, along
*Includes funding through the Company such as LRBT, LWC, Project Green etc.
with a package of Fevistik glue, marketed by our Chemicals
Business.
As a solution, we funded the establishment of a fully-
The response was overwhelmingly positive. Children created equipped science lab at the school as well as covering two
scrapbooks full of colour and information. To reward their teachers’ salaries. Formal inauguration of the lab was carried
hard work, prizes were awarded at each grade level. To out in May 2017, and is expected to significantly improve the
help sustain the interest in reading and writing, we also learning of science students at secondary level.
installed a “Dewaar-e-Sahafat” or “Wall of Journalism,”
at the school premises, where students can display their Science Lab – Lyari School & USAID –
own articles, stories and other writings about activities and Secondary Education Support
events happening in their school. The objective of ‘‘Dewar- In April 2017, ICI Pakistan Limited signed an MoU outlining a
e-Sahafat” supports that of the Reader’s Club; that children partnership with the Sindh Community Mobilization Program,
express their thoughts and develop their intellectual capacity a part of the USAID-funded Sindh Basic Education Program.
through creative writing. As part of this agreement, we provided funds to establish
a science lab at a government girls secondary school Wali
Science Lab - Brarkot School, KPK – Secondary Muhammad Haji Yaqoob in Lyari, which was an urgent
Education Support requirement at the school, which caters to approximately 780
Following the devastating 2005 earthquakes in the Northern girls at present.
Areas of Pakistan, the ICI Pakistan Foundation constructed
a new girls’ primary school facility in Brarkot, KPK, in 2007. Murshid Hospital School of Nursing – Higher
In 2008, the school was upgraded to middle school level by Education Support
the KPK Education Department, but when the girls graduated The ICI Pakistan Foundation provided funds to upgrade the
from middle school, they were compelled to discontinue their Murshid Hospital School of Nursing to college level, which
studies due to lack of accessible secondary education. Even will offer nursing students an upgraded four-year degree
after secondary classes were initiated for these girls, it soon programme which in turn offers higher employability. With
became evident that the lack of a science lab was causing the funds we provided, the school has upgraded its library
serious challenges. The nearest girls’ school with a lab as well as adding critical training equipment to its skills lab
was located at a distance of 8–10 kilometres; too far for the including life-sized models for students to practice life-saving
students to travel. medical techniques on. The inauguration of the new lab is
expected soon.
ICI Pakistan Limited Annual Report 2016 -17 55

ICI Pakistan Foundation in collaboration with Friends Welfare ICI Pakistan Limited launched the Reader’s Club project at the
Association, has established a science lab at the Government WRRA Secondary School in Shah Faisal Colony, Karachi, to
Girls Middle School in Bararkot. encourage reading.

Pakistan Agricultural Collation (PAC) – Higher LRBT Eye Clinics - Khewra


Education Support Our long-running eye care programme held in collaboration
We continue to provide funds to the PAC for establishment of with the Layton Rahmatullah Benevolent Trust (LRBT) continues
an agricultural technical institute to aid in agricultural research to operate sustainably, with camps held every month, with the
and impart quality education to farmers. exception of the month of Ramadan. Last year marked the
silver jubilee of this eye care programme which has benefitted
thousands of deserving patients from Khewra and beyond for
Health more than 25 years with quality, free eye care interventions.
Support extended to health-related initiatives includes
funding for Company-run programmes that serve our As of May 31, 2017, 284 eye camps have been held as part
communities, as well as financial support to reputed of the LRBT Eye Clinic programme, during which 148,846
healthcare non-profits. OPD consultations have been carried out, 16,513 surgeries
completed and 28,757 refractions have been performed.
Hamqadam Community Clinic:
In 2016, a mother and child healthcare community clinic was Childlife Foundation
established in Khewra in response to an observed need. Through the Foundation we completed the second year of
Funded by the ICI Pakistan Foundation and run in partnership our three-year pledge to the Child Life Foundation, a non-
with Marie Adelaide Leprosy Centre (MALC), the clinic has profit institution which operates and manages the Pediatric
now been in operation for 17 months, and is proving to be Emergency wards in both Civil and Jinnah Hospitals, Karachi.
a valuable addition to Khewra’s healthcare infrastructure. A new, third Pediatric Emergency Room added to Child Life’s
Previously, pregnant women and young children had to travel network is in the Sindh Government Hospital, Korangi No. 5,
long distances to access adequate healthcare facilities; which is the largest Pediatric ER in Pakistan. So far over one
these are now available to them locally at the Hamqadam million children have been treated in this ER.
Community Clinic.

We are pleased to report that large numbers of women and Community


children are regularly treated at the clinic, which is run by a Waste bins for a cleaner Khewra
lady doctor with the support of a lady health worker, along We provided 35 large waste bins to the Khewra Municipal
with a leprosy, ophthalmic and tuberculosis technician and Committee and surrounding educational institutes as part
ambulance driver. of an ongoing effort to promote better civic sense and
community awareness of issues such as health and hygiene.
Since the clinic’s inception in February 2016, a total of 6944 Installed in prominent locations, these waste bins will
OPD cases have been catered to, with 346 pregnant women encourage the proper disposal of waste materials.
registered at the clinic, and 998 children under the age of five
monitored for immunisation and nutrition through the ‘Road to
Health’ chart. Environment
Tree Plantation Drives
Recently an ultrasound machine has also been provided by Tree plantation is an ongoing focus for us. Given the growing
us to the clinic to aid in examination and diagnosis of patients. pressure on our environment, it is only prudent to attempt to
A state-of-the-art ambulance was also donated to the clinic offset environmental impacts in any way, and tree plantation
at the time of inauguration to cater to emergencies in the is possibly one of the best, most effective of these.
local area. So far, the ambulance has been utilised for 74 trips
and has addressed emergency needs to transfer patients Teams across the Company continue to enthusiastically
from Khewra to Rawalpindi/Islamabad, Lahore, Pind Dadan participate in tree plantation drives, especially on occasions
Khan, Chakwal, Kalarkahar, Sargodha, Jhelum, and Mandi such as Earth Day and World Environment Day. In 2016-17,
Bahauddin. over 12,000 trees were planted.
56 ICI Pakistan Limited Annual Report 2016 -17
ICI Pakistan Limited Annual Report 2016 -17 57

Governance & Compliance

Playing
by the Rules
While we are changing the game with our increasingly
innovative thinking, we remain clear on our fundamental
principles and rules. These include our governance and
compliance frameworks. They form the bedrock of all our
efforts. They give us the freedom and the confidence to
explore new solutions and strike out into new territories,
all the while remaining assured that we are adhering to
the highest standards of ethical, responsible behaviour.

This section includes the Board of Directors report, details of business


performance and activities, and our Governance, Compliance and Risk
Management policies
58 ICI Pakistan Limited Annual Report 2016 -17

Corporate Governance
and Compliance
Good corporate governance is at the heart of sustainable growth and progress.
It ensures that our operations adhere to the highest standards of ethical
practice, and that we are accountable for what we do.

Our Company’s corporate governance structure is based The Board of Directors is responsible for governing the
on the ICI Pakistan Limited Articles of Association, as well organisation by doing the following: establishing Board
as statutory, regulatory and other compliance requirements policies; setting out strategies, goals, and objectives for
which are applicable to companies listed on the Pakistan the Company to operate in accordance with and achieve;
Stock Exchange Limited (“PSX”). This governance structure is and formulating policies and guidelines that outline the way
complemented by several internal procedures, which include forward in achieving set goals and objectives.
a risk assessment and control system, as well as a system
of assurances on compliance with the applicable laws, The Board is accountable to shareholders for the discharge
regulations and the Company’s Code of Conduct. of its fiduciary function, while the Company’s management is
responsible for the implementation of the aforesaid strategies,
goals and objectives in accordance with the policies and
Corporate Governance Statement guidelines laid down by the Board of Directors. The day-
ICI Pakistan Limited is a public limited company established to-day management of the Company’s affairs is overseen
under the laws of Pakistan. The Company’s shares are listed by the Chief Executive (CE), whom the Board entrusts with
on the PSX. the necessary powers and responsibilities for the execution
of this role. The CE is in turn assisted by an Executive
Corporate Governance Structure of ICI Pakistan Management Team comprising the Chief Financial Officer
Limited and the heads of Businesses and Functions. The Board is
also assisted by a number of Sub-Committees comprising
mainly of independent/non-executive directors.

Code of Conduct
At ICI Pakistan Limited, we have always placed great
importance on adhering strictly to high standards and best
practices where corporate governance is concerned. We
encourage our people to live by our values at all times, and
ensure that ethical standards are upheld by our employees,
contractors, suppliers and others who do business with us.

Our long-standing commitment to upholding ethical conduct


is demonstrated by the fact that ICI Pakistan Limited had
Major External Major Internal a comprehensive Code of Conduct in place well before
Regulations Regulations the Code of Corporate Governance (CCG) introduced this
• Companies Ordinance, • The Articles of requirement for listed companies in 2002. To ensure all
1984/Companies Act, Association of the employees are well-versed with the Code, we include it in our
2017 and other allied laws Company induction training for new employees, as well as organising
• Listing Regulations/Rule • Code of Conduct regular training/refresher sessions at all levels. Upon joining
Book of the PSX. • Significant policies the Company, new employees are required to sign a
• Code of Corporate • Financial Remits declaration of compliance to the Code of Conduct after they
Governance and Securities have read and understood the Code.
Act 2015
• CDC Regulations
• Other SECP Regulations, Speak Up (Whistleblowing Programme)
Circulars, Notifications and We recognise the possibility that the Code of Conduct
Guidelines etc. may, at some point, be violated, and have made
provisions accordingly in the form of our whistleblowing
ICI Pakistan Limited Annual Report 2016 -17 59

A Depiction of the Whistleblowing Process

Attempt to solve within


Open communication
the department
with the line manager,
a
next higher manager
or HR Department If not solved use option
(b) or (c)

Employee Head of Internal Audit to Present a summary to the


needs to report a Contact Head of receive all reports and ICI Pakistan Limited
suspected breach b Internal Audit carry out investigations Board Audit Committee
of the Code of (Phone/Email/Personal) involving relevant parties, and ensure closure within
Conduct as necessary eight working weeks

Contact External Maintain anonymity and


c Contact via dedicated inform relevant authority
email address at ICI Pakistan Limited

Speak Up Reports During the Year


Number of Speak Ups reported to Audit Committee during the financial year ended June 30, 2017 3*

Number of Speak Up investigations completed and cases closed 2

* One case is under investigation.

programme, Speak Up. Through the Speak Up The terms of reference of these Committees can be found in
programme, employees can confidentially report cases this report, on page 66.
of suspected unethical dealings/breach of the Code
of Conduct by any employee. Speak Up offers several
courses of action, depending on the nature of the reported Internal Control
violation; confidential reports can be made via email to At ICI Pakistan Limited we have a robust internal control
the relevant HR Manager or Head of Internal Audit. If and risk management system. The overall responsibility of
greater anonymity is required, reports can be made to overseeing internal control processes lies with the Board
an independent third party (a renowned firm of chartered of Directors. The Risk Management and internal control
accountants) engaged for this purpose. All complaints processes are designed to safeguard the Company’s assets
are investigated and results are communicated to the and to appropriately address and/or mitigate emerging risks
Complainant (provided they have furnished a return being faced by the Company. The Company maintains a clear
address or other relevant contact information). Action is organisational structure with a well-defined chain of authority.
then taken accordingly by the Company. This process is Senior management has the responsibility to implement
overseen by the Board Audit Committee. procedures, monitor risk and assess the effectiveness of
various controls. Comprehensive details regarding the Risk
Management System are separately disclosed in the financial
Board Composition statements.
The Board of Directors of ICI Pakistan Limited comprises
of a well-balanced mix of executive, non-executive and
independent directors. The present Board has eight directors: Insider Trading
two executive directors, four non-executive directors and At ICI Pakistan Limited, we have a stringent policy on insider
two independent directors. The Chairman of the Board is a trading and securities transactions. This is articulated in a
non-executive director; the positions of Chairman and Chief policy paper, which is circulated periodically to all Company
Executive are held by separate individuals with clearly defined employees, and which details the procedure to be followed by
roles and responsibilities. employees while conducting any dealings in the Company’s
shares.
At ICI Pakistan Limited we established an Audit Sub-
Committee and an HR and Remuneration Sub-Committee The Company announces closed periods prior to the
of the Board well before the introduction of the Code of announcement of financial results, during which Executives
Corporate Governance. These Committees are composed (defined by the Board to be those employees drawing an
mainly of non-executive directors, including the Chairman. annual basic salary of PKR 2.4 million or above) and some
finance staff are barred from dealing in the Company’s
60 ICI Pakistan Limited Annual Report 2016 -17

shares. Dealings in the Company’s shares can only be


conducted outside the specified closed periods. Any
Annual General Meeting (AGM)
transaction carried out by an Executive in the shares of the The Company holds its AGM of shareholders in light of the
Company must be reported to the Company Secretary within Companies Ordinance, 1984/Companies Act, 2017, Listing
two days of execution, along with relevant details of purchase Regulations/Rule Book of Pakistan Stock Exchange Limited
and/or sale of shares. (PSX), Code of Corporate Governance and its Articles of
Association. We request all our shareholders to participate
in the AGM and other general meetings as and when these
Competition Law take place. We also ensure that a copy of the annual report
As laid out in our Code of Conduct, at ICI Pakistan Limited we containing the agenda and notice of our AGM is dispatched
support the principles of free enterprise and fair competition. to every shareholder at her/his registered address within the
The Company competes vigorously but fairly with its stipulated time.
competitors within the framework of applicable laws, to
provide better and increasingly more value-adding products During the last Annual General Meeting of the Company,
and services to our customers. no issues were raised by the shareholders present. Queries
raised were responded to accordingly by present Board
In 2014-15, our Legal Department conducted a Members, the Chief Executive and Company Secretary. In
comprehensive Competition Law Training for relevant the last AGM, questions were asked pertaining to: polyester
employees, and we continue to ensure compliance with staple fibre (Polyester Business); set-up of a Morinaga
competition laws for these employees. Additionally, all manufacturing facility in the country; Soda Ash expansion
employees are informed of the relevant competition laws project and market competition risks (Soda Ash Business);
in the Code of Conduct; upon joining the Company, each challenges in the chemicals sector; and partnership with
employee signs a declaration of compliance, which is Cogent Breeding, UK, regarding artificial insemination (Life
regularly renewed. Sciences Business, Animal Health Division).

United Nations Global Compact (UNGC) Ownership & Control Structure


ICI Pakistan Limited remains committed to making the Complete disclosure of ICI Pakistan Limited’s shareholding
UNGC’s Ten Principles part of our strategy, culture and structure is provided in the pattern of shareholding section
day-to-day operations. The Ten Principles form a set of core of the annual accounts of the Company, pursuant to the
values in the areas of human rights, labour standards, the Companies Ordinance, 1984/Companies Act, 2017, and
environment and anti-corruption. the Code of Corporate Governance. Our share capital is
comprised of ordinary shares. No other class of shares is
issued by the Company. The Yunus Brothers Group (YBG)
Adequate Disclosure has acquired 86.14% shares in the Company, details of which
At ICI Pakistan Limited, we endeavour to continue to be are disclosed in the pattern of shareholding. The remaining
transparent in our dealings with stakeholders. This is shares are held by the general public and institutions.
achieved through adequate and comprehensive disclosure
of all significant developments via communications targeted
to our shareholders and other stakeholders. These include Related Party Transactions
our financial statements, and other communications such as We maintain a complete and updated list of related parties.
public announcements and press releases. All transactions with related parties are carried out on an
unbiased, arm’s length basis as per formulas approved
All critical accounting estimates, rules and procedures by the Board of Directors. A complete list of all related
governing extraordinary transactions, or any changes in party transactions is compiled and submitted to the Audit
accounting policies along with their financial impact, are Committee every quarter. The Internal Audit Function ensures
disclosed in the notes to our financial statements. We that all Related Party Transactions are carried out on an arm’s
followed the Companies Ordinance, 1984/Companies length basis, and releases a quarterly report to that effect
Act, 2017, and applicable IAS and IFRS (International to the Board Audit Committee. After review by the Audit
Accounting Standards and International Financial Reporting Committee, the transactions are placed before the Board for
Standards). In addition, we make an effort to provide as much their consideration and approval.
supplementary information in our financial statements as
reasonably possible.
Material Interests of Board Members
As part of our effort to ensure our stakeholders are well- Directors are required to disclose, at the time of appointment
informed about our operations, we formulated an Investor and on an annual basis, the directorships or memberships
Relations Policy which aims to ensure that the financial they hold in other corporate bodies. This is in pursuance with
community, and other constituencies, such as analysts, Section 205 of The Companies Act, 2017 which also requires
shareholders and investors (both current and potential), are them to disclose all material interests. We use this information
ensured timely access to all relevant information pertaining to help us maintain an updated list of related parties. In case
to the Company, which includes business updates, stock any conflict of interest arises, the matter is referred to the
and financial performance, historical performance and future Board’s Audit Committee.
prospects.
ICI Pakistan Limited Annual Report 2016 -17 61

sustainability parameters. Underpinning both these objectives


Offices of the Chairman and is the “how” component, which measures what processes
Chief Executive and policies were implemented and complied with.
In compliance with good governance practices, the position
of the Chairman of the Board of Directors and the office of the
Chief Executive are held by separate incumbents with a clear Evaluation of the Board’s Performance
demarcation of roles and responsibilities. The Board evaluates its performance by considering the overall
performance of the Company. Every member of the Board
makes an effort to attend all Board meetings and to actively
Brief Roles and Responsibilities of participate in these proceedings, wherein discussions are held on
Chairman and Chief Executive various strategic issues. The Board ensures that the Company
The Chairman’s primary role is to ensure that the Board adopts the best practices of corporate governance in all areas of
is effective in its tasks of setting and implementing the its operations, as well as having a robust internal control system
Company’s direction and strategy. The Chairman is in place. The Board closely monitors major capital expenditure
responsible for assessing and making recommendations projects including balancing, modernisation and replacement.
regarding the effectiveness of the Board, its Sub-Committees, Succession planning and compliance with all regulatory
and of individual directors in fulfilling their responsibilities, requirements are also areas on which the Board remains
including avoidance of conflicts of interest. The Chairman is focussed throughout the year. The Board is fully cognisant of
entrusted to supervise and direct the Board’s proceedings. the Company’s commitment to its sustainability strategy based
He or she has the authority to set the agenda, give directions on social, economic and environmental factors and has issued
and sign the minutes of the Board meetings. appropriate policy guidelines to ensure continued maintenance of
performance in these areas.
The Chief Executive (CE) is the senior-most full-time executive
of the Company, to whom all Business and Functional heads In line with global best practices, at ICI Pakistan Limited
report. He is responsible for presenting the Company’s aims we have developed and successfully implemented a
and policies to the government and all stakeholders. The CE methodology for self-evaluation of the Board’s performance
is also responsible for the performance of the Company, in as an entity on the basis of the following factors: board
accordance with the business strategy adopted by the Board. composition, leadership and planning, board effectiveness,
The Chief Executive reports to the Board of Directors. board accountability, strategy and performance, organisation,
risk management, ethics and compliance.
The responsibilities of the Chief Executive include:
• Formulating, and after Board approval, successfully
implementing Company policy. Internal and External Audit
• Directing strategy towards the profitable growth and Our Internal Audit function plays a pivotal role in providing
operations of the Company. the Board with an objective view in evaluating and improving
• Developing strategic operating plans that reflect the the effectiveness of risk management and related control
longer-term objectives and priorities established by the systems throughout the Company. The Head of Internal
Board. Audit independently reports to the Audit Committee and
• Maintaining an ongoing dialogue with the Chairman of administratively to the Chief Executive. A renowned firm
the Board to keep him fully informed of all significant of Chartered Accountants has been hired to perform
developments. internal audits within the Company. The Head of Internal
• Putting in place adequate operational planning and Audit ensures that the audit plan, as approved by the Audit
financial control systems. Committee, is effectively and seamlessly implemented in
• Ensuring that operating objectives and required close coordination with the external firm.
standards of performance are understood by all
Company employees. Internal Audits are executed across all Businesses by our
• Monitoring of operating and financial results against independent internal auditors and all findings are reported to
budget. the Senior Management and the Audit Committee of the Board.
• Taking remedial action where necessary and informing Action plans are followed up rigorously to ensure that timely
the Board of significant changes. corrective action is implemented for the effective functioning
• Ensuring that the Company is in compliance with all of controls. The Board, through the Audit Committee, has
applicable laws. reviewed the assessment of risks, internal control and disclosure
• Building and maintaining an effective executive team and procedures and suggested remedial actions where applicable.
appropriate succession plans. The role of the Audit Committee is to assist the Board in fulfilling
its oversight responsibilities regarding the integrity of ICI Pakistan
Limited’s financial statements, risk management and internal
Performance Criteria for the control, compliance with legal and regulatory requirements, the
Chief Executive external auditors’ performance, qualifications and independence,
The performance of the Chief Executive is evaluated based and the performance of the internal audit function. External
on a combination of quantitative and qualitative value-driven auditors are appointed by the shareholders on a yearly basis at
objectives. Quantitative value-driven objectives relate to the AGM on the recommendation of the Board of Directors. The
growth and financial performance of the Company, while partner in charge of our audit is rotated every five years as per the
qualitative objectives relate to the Company’s performance on local regulations.
62 ICI Pakistan Limited Annual Report 2016 -17

Risk
Management
Managing risk is a vital part of staying ahead of the curve. At ICI Pakistan
Limited, the overall responsibility of overseeing risk management
processes lies with the Board of Directors. This includes risk management
and internal control procedures.

Our Company’s risk management processes are designed


to safeguard our assets and address possible risks to
our Businesses, including possible impacts on business
continuity. These documented processes are subject to
regular review. Identified risks which could potentially affect
the achievement of strategic, operational, financial and/or
compliance objectives are promptly reported to the Board
and senior management, allowing them to take timely action RISK
where required, to ensure the Company’s operations continue
smoothly.
MANAGEMENT
SYSTEM
ICI Pakistan Limited has a clear organisational structure with
a well-defined chain of authority. Our senior management
teams are responsible for implementing procedures,
monitoring risk and assessing the effectiveness of various
controls.

We employ a robust Enterprise Risk Management (ERM)


framework, which is integrated across the organisation to
ensure risks are proactively identified and addressed. The Our ERM framework encompasses the following
ERM framework utilises comprehensive, interactive systems elements:
and processes, which enable us to systematically identify, • A transparent process providing necessary insight into
evaluate, and assess risks. Highlighted risks are prioritised risks that the Company faces
according to their impact and likelihood, and remedial actions • A common language utilised for risk and its related
are devised accordingly. actions – this facilitates clear communication and
decision-making by ensuring understanding across the
Risk management is an ongoing need, and therefore, this board
annual process includes interim updates on both, risks, as • Clear accountability and governance structure in relation
well as remedial and/or corrective actions. to risk management
ICI Pakistan Limited Annual Report 2016 -17 63

Risk Type Risk Mitigation Plan Risk


Exposure
Rating*

Changing economic conditions, Strategic Continued commitment to customer centricity, product High
government policies and law and
quality, innovation and supply chain efficiencies,
order situation
along with a strong market footprint, can help us
appropriately respond to challenges posed by weak
• Local competition economic and demand conditions. The Board and
management endeavour to define and implement a
• Risk of ad-hoc tariff adjustments clear strategy to overcome these strategic external
on imports impacting local risks by regularly benchmarking production efficiencies
producers, such as ICI Pakistan against competitors’ to minimise cost. The Board and
Limited management continuously seek dialogue with policy
makers through various business forums in the overall
• Large scale cheap imports at interest of domestic industries, and are actively vigilant
uneconomical prices or dumping with policies and proceedings of cases filed against
in Pakistan by major international anti-dumping. Training is also provided to update
manufacturers concerned stakeholders with regard to the law and
order situation.

Exposure to liabilities arising from Compliance Medium


We closely monitor changes in the regulatory
non-compliance with laws and
regulations environment and adapt to all significant changes in a
timely manner. We are dedicated to compliance with
all legal and regulatory requirements with special
emphasis on conformity to our Code of Conduct.
We operate under a comprehensive Competition
Law compliance programme including training,
monitoring and assessment.

Inability to attract, engage and Strategic Medium


retain high potential/promotable Our key focus remains on the growth and
talent wellbeing of our intellectual capital. The re-launch
of ICI Pakistan Limited’s value driven competency
framework (SuccessFactors) provides the roadmap
for talent acquisition and development activities,
ensuring that the right talent is available for the
delivery of strategic ambitions. Advancing the
wellbeing and engagement of our workforce is
a high priority and we consider it a commitment
that encompasses employee satisfaction and
competitive benefits. The Board and management
place great emphasis on attracting, educating,
motivating and retaining our workforce, through
further strengthening tools such as our Performance
and Development Discussion, organisation health
surveys and ensuring robust succession planning in
the Company.
64 ICI Pakistan Limited Annual Report 2016 -17

Risk Type Risk Mitigation Plan Risk


Exposure
Rating*

Overdependence on single source Operational/ We continuously engage our principals in a strategic Low to
suppliers and major principals Commercial view of business in Pakistan to align and create Medium
a common view of the business. We emphasise
the satisfaction of our suppliers and work hard to
outperform their expectations. We safeguard the
Company’s position through secured contracts and
continue to seize opportunities to launch our own
range of products/brands to reduce dependency on
principals. We will further explore alternate suppliers
and perform concrete and thorough research on
their product ranges to have an alternate ready if
required.

Product risk Operational/ Continued focus on quality control, at principal level Medium
Commercial and at business level (e.g. storage/transportation at
Adverse events and reporting in the correct temperatures, etc.) We also ensure detailed
press on the quality or performance information is available on packaging, and training
of products needs of staff are regularly monitored for reporting
of adverse events. We also have defined standard
operating procedures for crisis management and
media handling. Moreover, our customer complaint
management system aids in the timely review of
the concerns and needs of every customer. We
further conduct gap analyses to improve our testing
methodologies so as to comply with our value of
Customer Centricity.

Commodity Risk Operational/ Review plan on an on-going basis and in case of Low
Commercial any changes in market dynamics, highlight issues/
Reduction or increase in demand for scenarios to the principal in advance, negotiating
seasonal imported goods versus quantities and prices.
plan/outlook

Failure to keep pace with Strategic Our management highly values data security, Low
technological advancements
automation of operations and technological
advancement in the relevant industries. We have
invested in a robust management reporting system,
research and development, and lab infrastructure
to improve in-house capabilities. We maintain
close ties with our customers and consult them to
remain updated on the changes taking place in the
industry. Our business development team regularly
issues a news bulletin containing information on new
developments and changes taking place across the
industry globally.
ICI Pakistan Limited Annual Report 2016 -17 65

Risk Type Risk Mitigation Plan Risk


Exposure
Rating*

HSE&S compliance risk Health & For us, compliance with HSE&S standards is our Low
Safety license to operate. The Company continues to focus
on energy conservation, waste and operational
HSE&S risks in production and supply efficiencies and eco-efficiency foot print reduction.
chain processes can adversely affect A detailed report on HSE&S performance and
our operations. These risks concern development in 2016-17 is available in the report.
areas such as personal health and
safety, product safety and operating
eco-efficiency. An unlikely scenario
can involve major incidents with high
impact for our organisation as well as
our local communities, which may cause
business disruption and reputational
damage.

Fluctuation in exchange rates Financial We have a centralised treasury and forward Low
contracts are obtained from time to time to limit
Continued depreciation of the Pakistani the exposure to foreign currency risk. However, the
Rupee against the US Dollar has a erosion of margins because of an inability to raise
negative impact on the financial results prices as highlighted is a risk the Company has
of our Businesses through erosion to take, and one which is being partially mitigated
of margins, particularly in the Life through the introduction of generic brands and
Sciences Business, where prices of continuous engagement with policy makers in the
pharmaceutical products are capped government.
by the Ministry of Health.

Interest rate risk Financial The Company has availed financing for working Low
capital requirements at competitive spreads and
Risk of an increase in interest rates major borrowing is set on a floating rate. For other
having an advance impact on the borrowings, the interest rate risk is at an acceptable
profitability of the Company.
level.

Credit Risk Financial The Company’s counterparty risk is sufficiently Low


diversified with established limits for key customers.
Risk of default in payments by credit Credit reviews are regularly conducted to align
customers in the current challenging the exposure in keeping with changing conditions
economic conditions, leading to while remaining within the bounds of the overall risk
adverse financial impact on the appetite of the Company.
Company.

Liquidity Risk Financial The Company ensures optimum utilisation of cash Low
generated by operations and has sufficient financial
Risk of the Company being unable to lines with various institutions to meet any funding
fulfil its financial obligations due to non- requirements.
availability of sufficient funds

*Risk exposure rating is based on the likelihood and impact of the risk on the entity as a whole, and translated as such, based
on established criteria.
66 ICI Pakistan Limited Annual Report 2016 -17

Board and Management


Committees
recommendations of the Chief Executive on such matters as key
Committees of the Board management positions and who reports directly to the CE, and
obtains approval on such recommendations from the Board.
Audit Committee with brief terms of reference
The Audit Committee ensures that the Company has a sound The Committee comprises of five members; three Non-
system of internal financial and operational controls. Chaired Executive Directors including the Chairman of the Committee,
by an Independent Director, the Committee serves as the one Executive Director and one independent Director. The
eyes and ears of the Board, assisting it in the discharge of its General Manager Human Resource acts as the Secretary to
fiduciary responsibilities. the Committee. The Committee meets at least once a year.

The Audit Committee reviews the periodical financial Banking Committee


statements of the Company and announcements of results This Committee comprising two Executive Directors and
to the stock exchange. An important responsibility of the one Independent Director has been constituted to approve
Committee is to recommend to the Board the appointment of matters relating to opening, closing and day-to-day
external auditors, facilitate the external audit and discuss with operations of bank accounts. The resolutions passed by the
the external auditors major observations arising from interim Banking Committee are subsequently ratified by the Board.
and final audits. In doing so, the Committee also reviews the
Management’s response thereto. Shares Transfer Committee
The Shares Transfer Committee consists of two Executive
In addition, the main responsibilities of the Audit Committee and one Non-Executive Director. This Committee approves
also include risk management; compliance with relevant registrations, transfers and the transmission of shares.
statutory requirements; review of legal matters which Resolutions passed by the Shares Transfer Committee are
may significantly impact financial statements; monitoring subsequently placed at Board meetings for ratification.
compliance with the best practices of corporate governance,
and investigating any violations thereof; and ensuring
coordination between internal and external auditors. Management Committees
Executive Management Committee
In carrying out its duties, the Audit Committee has the The Chief Executive is the Chairman of the Executive
authority to discuss any issue within its remit directly with the Management Committee. The Committee comprises of all
management, internal auditors or external auditors, and may Business and Functional Heads. This Committee meets once
obtain outside legal or professional advice on the matter, if a month under the chairmanship of the Chief Executive and is
deemed necessary. The Audit Committee comprises three responsible for strategic business planning, decision making
members, of whom two are Non-Executive Directors. The and overall management of the Company.
Chairman of the Committee is an Independent Director
and the Head of Internal Audit acts as the Secretary to the HSE&S Management Committee
Committee. The Chief Financial Officer and representatives The Health, Safety Environment and Security Committee
of internal auditors attend Audit Committee meetings by monitors Companywide practices. It oversees the health,
invitation. safety, environment and security functions of the Company
and is also responsible for ensuring that all our operations
The Audit Committee meets at least four times a year. At least are environment-friendly and compliant with the prevalent
once a year, it meets external auditors independent of the regulatory framework.
CFO and the internal auditors.
Succession Planning Forum
Human Resource and Remuneration Committee This forum is chaired by the Chief Executive and meets
The Human Resource and Remuneration Committee is periodically to review the Company’s succession planning
a Sub-Committee of the Board and is responsible for and talent pipeline at all levels. This forum is supported by the
reviewing and recommending the selection, evaluation following capability groups:
and compensation of the Chief Executive; the Executive
Management Team; and the Head of Internal Audit. • Commercial Capability group
Additionally, it also reviews and recommends HR • Technical Capability group
management policies and the succession planning process • HR Capability group
for the position of the Chief Executive and his direct reports. • Finance and IT Capability group
The Committee also takes into consideration the
ICI Pakistan Limited Annual Report 2016 -17 67

Company
Information
Board of Directors
Muhammad Sohail Tabba Chairman (Non-Executive) Asif Jooma Chief Executive
Muhammad Ali Tabba Vice Chairman (Non-Executive) Khawaja Iqbal Hassan Independent
Jawed Yunus Tabba Non-Executive M Abid Ganatra Executive
Amina A Aziz Bawany Non-Executive Kamal A Chinoy Independent

Audit Committee HR & Remuneration Committee


Khawaja Iqbal Hassan Chairman Muhammad Ali Tabba Chairman
Muhammad Ali Tabba Member Muhammad Sohail Tabba Member
Jawed Yunus Tabba Member Jawed Yunus Tabba Member
Asif Jooma Member
Khawaja Iqbal Hassan Member

Chief Financial Officer Executive Management Team


M Abid Ganatra Asif Jooma Chief Executive
Arshaduddin Ahmed General Manager, Chemicals Business
Eqan Ali Khan General Manager, Strategy and Business Development
Company Secretary Fathema Zuberi General Manager, Human Resources
Saima Kamila Khan M Abid Ganatra Chief Financial Officer
Matin Amjad General Manager, Pharmaceuticals
M A Samie Cashmiri Vice President, Life Sciences Business
Head of Internal Audit Saima Kamila Khan General Counsel, Company Secretary and Head of
Muhammad Ali Mirza Corporate Communications & Public Affairs
Suhail Aslam Khan Vice President, Polyester and Soda Ash Businesses

Bankers Registered Office


Allied Bank Limited National Bank of Pakistan ICI House, 5 West Wharf,
Askari Bank Limited NIB Bank Limited Karachi-74000
Bank Al Habib Limited Samba Bank Limited Tel: 111-100-200, (021) 32313717-22
Bank Alfalah Limited Standard Chartered Bank (Pakistan) Fax: 32311739
Bank of Punjab Limited Website: www.ici.com.pk
Citibank N.A. United Bank Limited
Deutsche Bank AG
Faysal Bank Limited Auditors Shares Registrar
Habib Bank Limited Internal Auditors FAMCO Associates (Pvt) Ltd.
Habib Metropolitan Bank Limited KPMG Taseer Hadi & Co., 8-F, Next to Hotel Faran, Nursery,
HSBC Bank Middle East Limited Chartered Accountants Block-6, P.E.C.H.S. Shahrah-e-Faisal,
HSBC Bank Oman S.A.O.G. Karachi.
MCB Bank Limited External Auditors www.famco.com.pk
Meezan Bank Limited EY Ford Rhodes Tel: (021) 34380101-2,
Chartered Accountants Fax: (021) 34380106
68 ICI Pakistan Limited Annual Report 2016 -17

Our Board of Directors

Muhammad Sohail Tabba Muhammad Ali Tabba


Chairman Vice Chairman

Muhammad Sohail Tabba is a leading businessman in Pakistan Appointed as Vice Chairman of ICI Pakistan Limited on December
with vast experience in the manufacturing, energy, real estate and 28, 2012, Muhammad Ali Tabba has been Chief Executive of Lucky
cement sectors gained during an illustrious career spanning over Cement Limited since 2005, succeeding his late father. He started
two decades. his career as a Director with the Yunus Brothers Group (YBG) in 1991
and has since successfully reformed and expanded the companies
His association with the Yunus Brothers Group (YBG), one of the he heads within the Group. He also serves as the Chief Executive
largest export houses of Pakistan, has successfully transformed of Yunus Textile Mills Limited, a leading name in the home textiles
the group’s textile concerns into leading global players. These industry with subsidiaries in the US, Europe, Canada and France.
concerns include such names as Gadoon Textile Mills Limited and
Lucky Knits Private Limited, where he serves as Chief Executive, Muhammad Ali Tabba is a distinguished leader and serves as a
and Yunus Textile Mills Limited and Lucky Textile Mills Limited Board Member of the Trade Development Authority of Pakistan,
where he serves as a Director on the Board. the premier trade organisation of the country which operates under
the Federal Ministry of Commerce. He is also a Trustee of the
Muhammad Sohail Tabba is also the Chief Executive of Lucky Fellowship Fund for Pakistan (FFFP) which sponsors and sends one
Energy Private Limited and Yunus Energy Limited in addition to top Pakistani scholar annually to the Woodrow Wilson International
Lucky One Private Limited. He is the Chairman of Lucky Paragon Centre for Scholars, a Washington D.C.-based think-tank. In
Readymix Concrete and a Director on the Board of Lucky Cement addition to these important roles, Mr Tabba is also on the Board of
Limited – Pakistan’s leading cement manufacturer and exporter. the Pakistan Business Council (PBC), a business advocacy forum
comprising of leading private-sector businesses and has recently
In December 2016, Mr Sohail Tabba was appointed as a Director been appointed as a board member of Pakistan International
on the Board of Kia Lucky Motors Pakistan Limited (a subsidiary Airlines Corporation Limited (PIACL). He has been nominated to the
of Lucky Cement Limited). Board of the Pakistan-India Joint Business Council (PIJBC), which
promotes trade between the two countries. Mr Tabba is also the
Mr Tabba was appointed as a Non-Executive Director on the Chairman of the All Pakistan Cement Manufacturers Association
Board of ICI Pakistan Limited on December 28, 2012, and (APCMA), a regulatory body of cement manufacturers in Pakistan.
appointed as the Chairman of the Board of Directors of ICI
Pakistan Limited on April 29, 2014. Muhammad Ali Tabba is also a generous philanthropist with
extensive engagements in many community welfare projects.
Mr Tabba’s philanthropic and social engagements include being He serves on the Board of Governors of numerous renowned
the founding member of the Child Life Foundation and the Italian universities, institutions and foundations. He is the Vice Chairman of
Development Council. He also serves as a Director for the a not-for-profit organisation, the Aziz Tabba Foundation (ATF), that
Tabba Heart Institute and the Aziz Tabba Foundation. He has works extensively in the fields of education, health and housing.
also previously served on the Board of Governors at Hamdard The Foundation runs two state-of-the-art hospitals in Karachi,
University Pakistan. the Tabba Heart Institute and a kidney centre, the Tabba Kidney
Institute. ATF’s mission is to provide humanitarian and welfare
service to the community at large from all over Pakistan.
Recognising his commitment to the social development sector of
the country, in 2010, the World Economic Forum (WEF) bestowed
the title of Young Global Leader (YGL) on Mr Tabba in recognition of
his outstanding services and contributions.
ICI Pakistan Limited Annual Report 2016 -17 69

Amina Abdul Aziz Bawany Jawed Yunus Tabba


Non-Executive Director Non-Executive Director

Appointed as Non-Executive Director on the Board of Directors Appointed as Non-Executive Director on the Board of Directors
of ICI Pakistan Limited on December 28, 2012, Amina Abdul Aziz of ICI Pakistan Limited on April 29, 2014, Mr. Jawed Tabba has
Bawany holds a postgraduate degree in early years education rich experience in the textile industry and is currently the Chief
with over ten years’ experience in the education sector. She Executive of Lucky Textile Mills Limited, which is among the top five
holds a key oversight position within the Yunus Brothers Group home textile exporters from Pakistan. He has been instrumental in
(YBG) and possesses a versatile skill set with experience in managing the textile concerns of the Yunus Brothers Group and has
customer relations and sales, and is known for her attention to transformed Lucky Textile Mills Limited into one of the premier textile
detail and excellent communication skills. companies in Pakistan. Lucky Textile Mills has been a story of rapid
expansion and diversification in the textile industry under Mr. Tabba’s
She is also on the boards of various charities that successfully leadership and guidance. He is also the Chairman of the Shares
raise funds for the medical and educational needs of Transfer Committee of the Board of Lucky Cement Limited.
underprivileged citizens of Pakistan.
His untiring efforts helped him acquire deep insight and expertise
into the export and manufacturing activities. Mr. Jawed Tabba is
also managing the real estate project LuckyOne, which is one of the
largest malls in Karachi. LuckyOne is currently touted as a multi-
faceted first of its kind regional shopping mall which is revolutionising
the shopping experience in Pakistan.

Mr. Jawed Tabba is also extensively engaged in community


welfare projects which include the Aziz Tabba Foundation.
The Foundation works extensively in the field of social welfare,
education, health and housing.
70 ICI Pakistan Limited Annual Report 2016 -17

Our Board of Directors

Asif Jooma Khawaja Iqbal Hassan


Chief Executive Independent Director

Asif Jooma started his career in the corporate sector with ICI Khawaja Iqbal Hassan was appointed as an Independent Director
Pakistan Limited in 1983 and has over 30 years of extensive on the Board of ICI Pakistan Limited on January 18, 2013.
experience in senior commercial and leadership roles. Following
his early years with ICI Pakistan Limited, and subsequently, Mr Hassan graduated cum laude from the University of San
Pakistan PTA Limited, Mr Jooma was appointed Managing Francisco in 1980 with majors in Finance and Marketing. He
Director of Abbott Laboratories Pakistan Limited in 2007. After started his career with Citibank N.A. where he held key positions
serving there for nearly six years, he returned to ICI Pakistan in Saudi Arabia, Turkey and Pakistan. After leaving Citibank in
Limited as Chief Executive in February 2013. 1994, Mr. Hassan co-founded Global Securities Pakistan Limited,
a former joint venture firm of UBS and then established NIB Bank
A Bachelor of Arts in Developmental Economics from Boston Limited which was subsequently majority-acquired by Temasek
University, Mr Jooma has previously served as President of the Holdings of Singapore. He has served as Chief Executive Officer
American Business Council, President of the Overseas Investors of both institutions.
Chamber of Commerce and Industry, member of the Board
of Investment, Government of Pakistan and Chairman of the Mr Hassan is presently a member of the Board of Directors of
Pharma Bureau. Mr Jooma serves on the Board of Systems the State Bank of Pakistan and the Board of Governors of the
Limited and is the Chief Executive of NutriCo Pakistan Private Karachi Grammar School. He has previously served on the
Limited. He is on the Board of Governors of the Lahore University Boards of The Civil Aviation Authority of Pakistan (CAA), Pakistan
of Management Sciences (LUMS) and the Indus Valley School of Steel Mills Limited, Habib Bank Limited, National Fullerton Asset
Art and Architecture (IVSAA), and is also a Trustee of the Duke Management Company Limited, Citicorp Investment Bank
of Edinburgh’s Awards Programme. Mr Jooma has attended Pakistan, The Pakistan Fund, Global Securities Pakistan Limited,
Executive Development Programmes at INSEAD and Harvard NIB Bank Limited, The Lahore University of Management
Business School. Sciences (LUMS), The Central Depository Company of Pakistan
Limited and The Pakistan Centre for Philanthropy (PCP).

Mr Hassan is a former Vice Chairman of the Pakistan Bankers’


Association and has served as Chairperson, Banking Sector
Committee on Reform of Pakistan’s Banking Companies
Ordinance. He has also been a member of the Prime Minister
of Pakistan’s Task Forces on Foreign Exchange Reserves
Management, Corporate Tax Reform and Capital Markets Reform.

In 2007 Mr. Hassan was awarded the Sitara-i-Imtiaz by the


Government of Pakistan for his meritorious contribution to
national interests.
ICI Pakistan Limited Annual Report 2016 -17 71

Kamal A Chinoy Muhammad Abid Ganatra


Independent Director Executive Director & CFO

Mr Kamal A Chinoy is Chief Executive of Pakistan Cables Appointed as a Director on the Board of Directors of ICI Pakistan
Limited. He graduated from the Wharton School, University of Limited on December 28, 2012, and as the Chief Financial Officer of
Pennsylvania, USA. the Company in April 2013, Mr. Abid Ganatra has been associated
with the Yunus Brothers Group since 1994. He has more than 20
He serves on the Board of Directors of ICI Pakistan Limited, years of diversified experience in senior management positions with
International Industries Limited, International Steels Limited, an emphasis on financial management, operational management,
NBP Fullerton Asset Management Limited (NAFA), Askari Bank capital restructuring, mergers and acquisitions, corporate and legal
Limited and Atlas Power Limited as well as being Chairman of affairs as well as taxation.
Jubilee Life Insurance. He is also Honorary Consul General of the
Republic of Cyprus. Mr. Abid Ganatra is a fellow member of the Institute of Chartered
Accountants and the Institute of Cost and Management
Mr Kamal Chinoy is a member of the Executive Committee of Accountants of Pakistan. He holds a Bachelor’s in Law and a
the International Chamber of Commerce (ICC) Pakistan and Past Master’s in Economics.
President of the Management Association of Pakistan (MAP).
He also serves on the Board of Governors of Army Burn Hall
Institutions.

He has previously served as the Chairman of the Aga Khan


Foundation (Pakistan). He has also served as a Director of
Pakistan Centre for Philanthropy, Pakistan Security Printing
Corporation, Atlas Insurance and First International Investment
Bank (an Amex JV). He has also served on the Undergraduate
Admissions Committee of the Aga Khan University and the
University of Pennsylvania Alumni Committee for Pakistan.

He is an advisor to Tharpak, a consortium of international


companies interested in developing the Thar coal field.
Mr Chinoy is also a Certified Director, having been certified by
the Pakistan Institute of Corporate Governance.
72 ICI Pakistan Limited Annual Report 2016 -17

Our Executive
Management Team

Suhail Aslam Khan Matin Amjad Arshaduddin Ahmed Saima Kamila Khan Eqan Ali Khan
Vice President General Manager General Manager General Counsel, General Manager,
Polyester and Pharmaceuticals Chemicals Company Secretary Strategy and Business
Soda Ash & Head of CCPA Development
ICI Pakistan Limited Annual Report 2016 -17 73

Muhammad Abid Ganatra Kanize Fathema Zuberi Asif Jooma M. A. Samie Cashmiri
Chief Financial Officer General Manager Chief Executive Vice President
Human Resources Life Sciences
74 ICI Pakistan Limited Annual Report 2016 -17

Report of the
Directors
for the year ended June 30, 2017
The Directors are pleased to present their report, together with the audited
financial statements of the Company, for the year ended June 30, 2017
ICI Pakistan Limited Annual Report 2016 -17 75

On a consolidated basis, including the results of the


Overview Company’s subsidiaries, ICI Pakistan PowerGen Limited,
Net turnover of PKR 41,364 million for the year under review is Cirin Pharmaceuticals (Private) Limited and NutriCo Morinaga
12% above net sales for the year ended June 30, 2016, which (Private) Limited, profit after tax (PAT) for the year at PKR
were recorded at PKR 36,954 million. The sales revenue 3,280 million or PKR 35.54 EPS is 20% higher than the SPLY.
growth is attributable to growth across all Businesses. During the year, the Company recognised PKR 671 million as
share of profit from NutriCo Pakistan (Private) Limited.
Net turnover in the Polyester Business grew by 7% on account
of higher prices across the petrochemical chain, higher The Company has boldly pursued and successfully
average Polyester Staple Fibre selling prices and higher sales completed a number of expansion projects during the period
of Black Fibre, whereas Soda Ash revenues grew by 2% under review, in line with its growth aspirations. These
on account of higher volumes. The Life Sciences Business include:
recorded a 28% growth in sales on the back of new product
launches, improved commercial execution, new partnerships 1. The acquisition of Cirin Pharmaceuticals (Private) Limited,
and business expansion, while the Chemicals Business’s net a local pharmaceuticals company which provides a
turnover grew by 20% against the same period last year (SPLY) diverse product portfolio along with manufacturing
owing to higher sales volumes and a larger customer base. capabilities to the Life Sciences Business.

Operating profit for the year at PKR 4,044 million is 16% 2. Execution of a shareholders agreement for the
higher than the SPLY, with improved performances in the establishment of a state-of-the-art facility to manufacture
Polyester, Life Sciences and Chemicals Businesses. This Morinaga infant formula along with its distribution,
compensated for the Soda Ash Business’s marginally lower marketing and sale. This project, which is currently in
operating result compared to the SPLY, because of a higher progress, is being pursued through a newly incorporated
depreciation expense due to capitalisation of the 18MW subsidiary under the name NutriCo Morinaga (Private)
power plant. Growth in the Life Sciences and Chemicals Limited, in which ICI Pakistan Limited has majority
Businesses was mainly driven through expansion of the shareholding of 51%. The remaining shareholding is
product range, customer engagement programmes, as well equally divided between Morinaga Milk Industry Company
as cost efficiencies achieved in the Chemicals Business. Limited of Japan and UniBrands (Private) Limited.

Profit after tax (PAT) for the year ended June 30, 2017 at 3. The approval by the Board of Directors for the acquisition
PKR 3,296 million is 16% higher than the SPLY due to higher of a Wyeth Pakistan Limited-owned manufacturing facility,
operating profit, higher Dividend Income from NutriCo along with certain brands and registrations of Wyeth
Pakistan (Private) Limited and lower exchange losses as Pakistan Limited and Pfizer Pakistan Limited, to further
compared to the SPLY. Earnings per share (EPS) at PKR enhance the product portfolio and manufacturing capability
35.69 is 16% higher, compared to PKR 30.78 for the SPLY. of the Life Sciences Business. Regulatory formalities for the
completion of this transaction are under way.
76 ICI Pakistan Limited Annual Report 2016 -17

Financial Performance

Increase/
PKR (m) June 2017 June 2016 Decrease
%age

Turnover 47,549 42,689 11%

Net Turnover 41,364 36,954 12%


Gross Profit 7,765 6,479 20%
Operating Result 4,044 3,479 16%
Profit Before Tax 4,394 3,498 26%
Profit After Tax 3,296 2,843 16%
Earnings Per Share (PKR) 35.69 30.78 16%

Six years Financial Performace at a Glance


Net Turnover (PKR m) Operating Result (PKR m)

41,364
4,044
38,233 37,515
36,268 36,954
34,682 3,479
3,044

2,226
18,316 1,987
1,625
1,173

2012 ^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17 2012^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17
13† 13∞ 13† 13∞

Profit Before Taxation (PKR m) Earnings per Share (PKR)


4,394 35.69
30.78
3,498

2,703 23.02
18.43
1,981
1,749 12.55
1,496 10.54
1,026 7.45

2012^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17 2012^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17
13† 13∞ 13† 13∞

EBITDA (PKR m) Dividend (PKR per Share)


6,267
18.00
5,378
4,701 15.50

3,565
3,094 9.00 9.00
2,703

1,730 5.50
4.00
2.00

2012^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17 2012^ Jun’ Jun’ Jun’ 14 Jun’ 15 Jun’ 16 Jun’ 17
13† 13∞ 13† 13∞
ICI Pakistan Limited Annual Report 2016 -17 77

30-Jun-16 30-Jun-17
4% 4%
Raw materials and Raw materials and
3% 3%
services 5% services
5%
6% Government Exchequer
7%
and duties
Government Exchequer
7%
and duties 5% Employee remuneration
& benefits
76% Operating and other
Employee
75% remuneration & expenses
benefits
Dividends
Operating and other
expenses
Profit retained

PKR’ 000
Value Addition and its distribution
June 30, 2017 % June 30, 2016 %
Net Turnover 41,363,695 36,954,437
Sales Tax 2,656,168 2,945,901
Net Turnover including sales tax A 44,019,863 98% 39,900,338 98%
Other operating Income 892,701 2% 687,697 2%

44,912,564 100% 40,588,035 100%

Raw materials and services B 33,990,464 76% 30,329,577 75%


Government Exchequer and duties C 2,466,731 5% 2,733,712 7%
Employee remuneration & benefits D 3,079,192 7% 2,636,026 6%
Operating and other expenses E 2,080,086 5% 2,045,534 5%
Dividends
1,570,103 3% 1,200,674 3%
Profit retained F 1,725,988 4% 1,642,512 4%

44,912,564 100% 40,588,035 100%

Dividend Health, Safety, Environment and


In view of the Company’s earnings, the Board of Directors Security (HSE&S)
has recommended the Final Cash Dividend for the financial ICI Pakistan Limited is committed to maintaining the
year ended June 30, 2017, at the rate of 100% i.e. PKR 10/- highest standards of health and safety for its employees,
per share of PKR 10/- each, subject to the approval of the customers and contractors, as well as to the protection of the
shareholders at the forthcoming Annual General Meeting. environment through a set of HSE&S beliefs and principles.
This, including the interim dividend of PKR 8/- per share To demonstrate these principles, various new initiatives were
already paid, makes a total dividend of PKR 18/- per share. launched across the Company’s operations. During the year,
78 ICI Pakistan Limited Annual Report 2016 -17

Muhammad Sohail Tabba (Chairman of ICI Pakistan Limited) Michio Miyahara (President Morinaga Milk Industry Company
along with Asif Jooma (Chief Executive) visited the offices of Ltd.) along with other members of Morinaga Milk Industry
Morinaga Milk Industry Company Ltd. to discuss the NutriCo Company Ltd. visited Pakistan.
Morinaga joint venture.

there were a total of four reportable injuries to employees Recent capital development projects across the Company,
and supervised contractors, and one reportable injury which included the use of coal and biomass fired boilers
to independent contractors. No occupational illness was and heating systems, have seen an increase in waste, water
reported, due to rigorous compliance with the Company’s withdrawal, energy consumption, emissions, compared
various Health Assessment and Work Environment monitoring to previously set targets. Despite this, all manufacturing
programmes. A sharper focus on operational discipline and sites have reported healthy compliance with the National
stricter adherence to the Company’s HSE&S Management Regulations for liquid and air emissions.
System was supported by the management’s focus on these
areas through the Behaviour-Based Safety (BBS) programme. For more detailed information on HSE&S and Sustainability
These developments are a clear demonstration of the performance, please see the Sustainability section of the
Company’s resolve to maintain health and safety as a core Annual Report on page 112.
priority.

HSE&S performance achieved by the Polyester, Soda Ash, Community Investment (Corporate
Life Sciences and Chemicals Businesses was 10.02, 12.3, Social Responsibility)
1.05, and 0.27 million man hours respectively, without any ICI Pakistan Limited maintains a strong focus on investing
reportable injury for employees and supervised contractors. in its communities, with most major corporate social
responsibility (CSR) initiatives carried out through the ICI
The Environmental Performance Management Database Pakistan Foundation, a registered trust run and managed
(EPM) was upgraded and all teething issues were resolved by its own Board of Trustees. In addition to these, the
before successfully launching the application. Trainings were Company’s Businesses also carry out specific community
conducted for users at all ICI Pakistan Limited Businesses, and CSR activities. In accordance with the Company’s CSR
and reporting for the financial year 2016-17 was completed Policy, the Foundation’s initiatives (under the umbrella of
via the application. The Learning Events (LE) Portal, a tool to the Hamqadam Programme) focus primarily on: education,
aid in the proactive identification of hazards, was utilised to health, community and environment. The Foundation also
identify major risks at each location, and a programme was supports civic development through investment in community
developed accordingly to eliminate these risks. projects, disaster relief and rehabilitation activities as needed.
In 2016-17, the major initiatives supported by the ICI
The HSE&S Management Committee, Corporate Crisis Pakistan Foundation include:
Management Team and Sustainability Council were
reconstituted following organisational changes. As a Education
consequence of changes in the Crisis Management Team, Vocational Training – Established in 1973 to empower
the Crisis Management Plan was also updated. Sustainability young women from the Khewra community by imparting
Council Meetings were held to set five year targets (targets marketable skills, the ICI Pakistan Limited-funded and
2020-21) for all ICI Pakistan Limited disclosures and reporting operated Ladies Welfare Centre (LWC) continues to flourish,
parameters. offering year-long courses in professional tailoring and
cooking at its new facility. In December 2016, the latest batch
With the successful issuance of Corporate Engineering of 14 students completed their training; the students were
Procedures, Responsible Executives (REs) were nominated subsequently awarded certificates. The LWC also offers
by the Chief Executive, and each Businesses’ RE in turn internships and teacher training programmes, currently
nominated Responsible Engineers for specific areas to ensure employing five instructors, all of whom are former students of
system quality and integrity. In the year under review, the the LWC. Twelve students have been inducted into the new
Company continued its focus on reducing the Operational batch while to date, over 1,200 students have benefitted from
Eco Efficiency (OEE) footprint, through energy conservation, the LWC’s vocational training.
waste reductions, and NEQS compliance, by implementing
sustainability plans in all Businesses. In 2016-17, the Basic Household Electrical Wireman skills
course offered at the Polyester Business’s Training Centre
ICI Pakistan Limited Annual Report 2016 -17 79

Matin Amjad (GM, Pharmaceuticals), at the inauguration The attendees admired the ‘Deewar-e-Sahafat’ (Wall of
ceremony of the science lab at the Bararkot girls middle school. Journalism), at the WRRA School.

was upgraded to the more advanced Industrial Electrical secondary school (Wali Muhammad Haji Yaqoob School in
Wireman course to provide students with improved Lyari) which caters to approximately 780 girls.
employment opportunities in the industrial and commercial
sectors. The first batch of 12 students has successfully Higher Education Support – At the Murshid Hospital
completed this course. To date, approximately 45 students School of Nursing, located in Hub, Karachi, the Foundation
have completed the previous basic wiring course. provided funds to upgrade the school to college level. This
enables the school to offer nursing students an upgraded
Primary Education Support – The Government Boys four-year degree programme, in turn increasing employability.
and Girls Primary School, Tibbi Hariya, Sheikhupura, was With the funds provided, the school has upgraded its library,
previously managed by the Polyester Business’s CSR team as well as adding critical training equipment to its skills lab
in partnership with a local NGO, with 110 students currently including life-sized models for students to practice life-saving
enrolled. In 2016-17, to improve the quality of education and medical techniques on.
general standards, an agreement was entered into with the
CARE Foundation, a reputable non-profit, to take over the In addition, the ICI Pakistan Foundation continues to provide
management of the school. The CARE Foundation currently funds to the Pakistan Agricultural Coalition (PAC) for the
runs 716 schools with over 230,000 students and 4,000 establishment of an agricultural technical institute to aid in
teaching staff across the country. agricultural research and impart quality education to farmers.

In the coastal fisherman’s village of Kakapir, Karachi, the Health


Foundation initiated sixth grade classes in 2016-17 at the Community Healthcare Support – In 2016 a mother and
Government Boys and Girls Primary School, in partnership child clinic named the Hamqadam Community Clinic was
with Literate Pakistan Foundation, to cater to the growing established in Khewra in response to an observed need.
population of female students graduating beyond middle Funded by the ICI Pakistan Foundation and operated in
school level. These girls were unable to attend the nearby partnership with Marie Adelaide Leprosy Centre (MALC), the
co-education secondary school due to conservative social clinic has now been operational for 17 months, proving to
norms; as a result of this initiative, 12 female students are now be a valuable addition to Khewra’s healthcare infrastructure.
continuing their education beyond primary level in the sixth Large numbers of women and children are now treated at the
grade at Kakapir School. clinic; previously these patients had to travel long distances
to access adequate healthcare facilities. Since the clinic’s
Secondary Education Support – The ICI Pakistan inception in February 2016, a total of 6,944 OPD cases have
Foundation constructed a girls’ primary school facility been catered to, 346 pregnant women registered at the
in Brarkot, KPK in 2007 following the devastating 2005 clinic, and 998 children under the age of five monitored for
earthquakes, which was then handed over to the local immunisation and nutrition through the ‘Road to Health’ chart.
government. While the school was upgraded in subsequent Recently an ultrasound machine has also been provided
years, including the introduction of secondary school classes by the Foundation to the clinic to aid in examination and
for girls, the need for a science lab remained unattended. diagnosis of patients. A state of the art ambulance was also
As a solution, the Foundation funded the establishment of a donated to the clinic at the time of inauguration to cater to
fully-equipped science lab at the school as well as covering emergencies in the local area.
two teachers’ salaries. Formally inaugurated in May 2017, the
lab is expected to enhance the learning experience of science Also based in Khewra, the Company’s most remote
students at secondary level. community, ICI Pakistan Limited’s long-running eye care
programme in collaboration with the Layton Rahmatullah
Similarly, in April 2017, ICI Pakistan Limited signed an MoU Benevolent Trust (LRBT) continues to operate sustainably,
outlining a partnership with the Sindh Community Mobilization with camps held every month, with the exception of the
Program, part of the USAID-funded Sindh Basic Education month of Ramadan. Last year marked the silver jubilee of
Program. As part of this agreement, the Company sponsored this eye care programme which has benefitted thousands of
the setting up of a science lab at a government girls deserving patients from Khewra and beyond for more than
80 ICI Pakistan Limited Annual Report 2016 -17

Female colleagues from the Mozang Office, came together for Female colleagues and the women entrepreneurs posed for the
a group photograph after the conclusion of the Women’s Day camera after the Women’s Day session.
activities.

25 years with quality, free eye care interventions. To date, 284 volumes of the Company’s commitment and the collective
eye camps have been held as part of the LRBT Eye Clinic belief of its people in this important initiative, to achieve world-
programme, through which 148,846 OPD consultations have class engagement levels.
been carried out, 16,513 surgeries completed and 28,757
refractions performed. The Leadership Development Roadmap continues to be a
key ingredient in building the capabilities of the Company’s
Institutional Support – The ICI Pakistan Foundation employees. Through a structured and integrated talent
completed the second year of its three-year pledge to the development framework, which provides customised training
Child Life Foundation, a non-profit institution which operates modules, executive coaching sessions and learning projects,
and manages the Paediatric Emergency wards in both more than 886 managers participated in this initiative.
Civil and National Institute of Child Health (NICH), Karachi.
Recently, the third Pediatric Emergency Room added to The flagship “HR for Non HR Managers” programme
the Child Life Foundation network is located at the Sindh continued with an additional 69 managers participating
Government Hospital, Korangi No. 5, and is the largest this year. This programme is vital for managers as it helps
pediatric emergency facility in Pakistan. So far, over one them better understand the HR aspect of their role as line
million children have been treated in these ERs. managers. The Core Development Programme for engineers
also continued with a renewed focus, training 64 managers,
For more detailed information on these and other CSR and while functional and managerial trainings progressed as per
community investment initiatives, please see page 53 of the the training needs assessment. A total of 33,036 man-hours
Annual Report. were invested in employee training, focussing on functional
and leadership development, reflecting an increase of 17%
over the same period last year.
Human Resources
Today, ICI Pakistan Limited is focussed on its unwavering The revamped and innovative Graduate Recruitment Drive,
commitment to future growth and investment. This growth Race to the Boardroom, aimed to build a unique Employee
has been made possible, in no small part, by the human Value Proposition (EVP) while establishing ICI Pakistan
capital of the Company; their will and dedication enables Limited as a top tier employer, specifically targeting the
ICI Pakistan Limited to continue to progress. millennial generation. The Drive was successful, resulting
in the recruitment of 11 Graduate Recruits. The Company’s
To maintain and bolster this progression, the Company keeps overall ongoing talent acquisition efforts also continued,
a strong focus on providing a positive and enabling work further strengthening the talent pipeline through the
environment. It allows each employee to leverage their talent, recruitment of 29 graduates (including the 11 Graduate
and evolve into leaders of tomorrow. Recruits) from reputable institutes, and 243 experienced
professionals during the year.
The diverse and expanding nature of the Businesses and their
Divisions provides an invaluable learning and development The Performance and Development Discussion (P&DD)
experience. Cross-functional and cross-Business talent process continues to be an essential tool that provides
movement remains the Company’s strategic priority, which is regular and candid feedback to managers on performance.
evident through a remarkable 21% talent movement achieved It also helps them align their performance and development
during the year. with the strategy of the respective Business or Function. The
P&DD process was concluded as per guidelines, ensuring
With its strong focus on engaging employees, ICI Pakistan clear and credible assessment systems.
Limited partnered with Gallup for the ‘iMPOWER employee
engagement survey. Starting on the 35th percentile with a As the partner of choice, ICI Pakistan Limited considers gender
score of 3.87 (on Gallup’s 5 point rating scale) in 2015, the diversity a strategic ambition that will help the Company build
Company now stands at an impressive 68th percentile with a sustainable competitive advantage. ‘iMPACT, the Company’s
a score of 4.30 in 2017. This significant increase speaks gender diversity forum, continues to further the ambition
ICI Pakistan Limited Annual Report 2016 -17 81

As part of their engagement initiatives, team N-Gauge, at the The firefighting team demonstrated the proper use of equipment
Polyester Business arranged a cricket match and a barbeque during a mock emergency drill at the Polyester manufacturing
lunch for colleagues. site, Sheikhupura.

to increase the number of women across the organisation Risk management is an ongoing need, and therefore, this
through focussed gender-supportive initiatives. annual process includes interim updates on both, risks, as
well as remedial and/or corrective actions.
Innovation is a key value at ICI Pakistan Limited which
encourages the continued transformation of systems and ICI Pakistan Limited’s ERM framework encompasses the
processes. In this regard, the SAP SuccessFactors Talent following elements:
Management Suite is being implemented to digitise major • A transparent process providing necessary insight into
HR processes including recruitment, on-boarding, learning, risks that the Company faces
performance management, succession, and compensation • A common language utilised for risk and its related
and benefits, allowing for a much more contemporary and actions – this facilitates clear communication and
accessible approach to HR functions. decision-making by ensuring understanding across the
board
For more detailed information on Human Resources, please • Clear accountability and governance structure in relation
see page 42 of the Annual Report. to risk management

Risk Management Framework Polyester Staple Fibre Business (PSF)


Managing risk is a vital part of staying ahead of the curve. At Net Turnover (PKR m)
ICI Pakistan Limited, the overall responsibility of overseeing
June 2016 13,427
risk management processes lies with the Company’s Board
of Directors. This includes risk management and internal June 2017 14,388
control procedures.
Operating Result (PKR m)
The Company’s risk management processes are designed
June 2016 (856)
to safeguard its assets and address possible risks to the
Businesses, including possible impact on business continuity. June 2017 (438)
These documented processes are subject to regular review.
Risks identified which could potentially affect the achievement Global economic conditions remained uncertain during the
of strategic, operational, financial and/or compliance objectives year under review, on account of significant geopolitical
are promptly reported to the Board and senior management, events such as Brexit, the US Presidential elections and
allowing them to take timely action where required, to ensure the increasing tensions in the Middle East. In an attempt to
Company’s operations continue smoothly. end the three-year oil glut, OPEC and several non-OPEC
members decided to extend their agreed production cuts –
ICI Pakistan Limited has a clear organisational structure which came into effect from January 1, 2017 – till March 2018.
with a well-defined chain of authority. The Company’s As a result, crude oil prices showed some improvement, with
senior management teams are responsible for implementing an increase of 16% versus last year, subsequently pushing
procedures, monitoring risk and assessing the effectiveness prices up across the entire petrochemical chain. The prices
of various controls. of major PSF raw materials PTA and MEG followed suit, rising
by 4% and 13%, respectively. This resulted in an increase
The Company employs a robust Enterprise Risk Management of 5% in regional Polyester Staple Fibre (PSF) prices, a
(ERM) framework, which is integrated across the organisation change that was reflected in domestic prices buoyed by
to ensure risks are proactively identified and addressed. The the imposition of Anti-Dumping Duty (ADD) on imports from
ERM framework utilises comprehensive, interactive systems China. However, the industry was unable to fully capture the
and processes, which enable the Company to systematically pricing opportunity from this development due to two major
identify, evaluate, and assess the risks. The highlighted risks reasons: firstly, the imposed ADD was too low to be effective;
are prioritised according to their impact and likelihood, with secondly, PSF imports from non-Chinese sources increased,
remedial actions being devised accordingly. as did polyester-based yarn imports.
82 ICI Pakistan Limited Annual Report 2016 -17

Asif Jooma (Chief Executive) along with Suhail Aslam Khan (VP, A group of young engineers innovatively replaced the ash
Polyester and Soda Ash Businesses) visited the on-going Light conveyor using only in-house resources, upgrading the capacity
Ash expansion site. of the conveyor to 200 tons per day.

During the year, the Business achieved 1% higher volume of Net turnover for the year grew by 2% compared to the
sales which, along with an increase in PSF prices, resulted in same period last year (SPLY) due to higher soda ash sales
a 7% growth in net turnover over last year. An optimum level volumes in the domestic market. The Soda Ash Business also
of production, higher by 3% over last year, was achieved in continued regular exports to India and Afghanistan in order to
order to meet strong downstream demand. The Company’s maintain a footprint in the South Asian market.
recently launched Black Fibre product received widespread
appreciation from customers, capturing 47% of domestic The domestic soda ash market grew by 4% over last year
market share. mainly driven by growth in the branded detergent segment.
Demand for branded detergent increased substantially as
Energy costs rose due to a rebound in fuel prices and the these products continue to be preferred by consumers over
introduction of costly RLNG into the country’s gas network. laundry soap and generic detergents. Other market segments
exhibiting growth were the chemicals and refined sodium
The ongoing challenges of an oversupplied regional PSF bicarbonate (RSB) segments. The RSB market has grown in
industry, predominantly in China, continued to put pressure line with expectations, with the poultry and bakery segments
on margins. To mitigate the impact of this situation, the in particular driving growth due to high demand for both
Business undertook a number of internal cost rationalisation segments’ products in expanding urban markets.
initiatives which limited the increase in operating cost to only
2%. This translated into a 49% improvement in operating The Business’s operating result for the year, at PKR 2,730
results over last year. million, was 4% lower than the same period last year,
essentially due to significantly higher depreciation charges.
During the fiscal year, the Business successfully defended At the end of the fiscal year 2016, the Business capitalised
the final determination of Anti-Dumping Duty (ADD) on two new steam and power generation projects as well as a
Chinese PSF imports. With regard to Free Trade Agreements Refined Sodium Bicarbonate capacity expansion project;
with China, Turkey and Thailand, the industry maintained a these projects have resulted in a PKR 340 million increase in
strong focus on keeping PSF in the “no concessions” list, depreciation charges over the previous year.
also highlighting this issue at various consultative forums
organised by the Ministry of Commerce. The Business maintained a strong focus on improving the
reliability and production capability of the Soda Ash plant. As
Going forward, the current oversupply situation in global a result, production volumes (at 345,581 tons) remained 1%
PSF markets has been forecasted to persist. The trajectory higher than the SPLY. The successful commissioning of the
of feedstock prices will be determined by the movement in steam turbine led to the achievement of a milestone for the
crude oil prices (dependent on US crude production and Business with the Soda Ash plant successfully operating on a
OPEC output cutbacks) and the market fundamentals of single power source for the first time in its history.
raw materials.
Currently, work is underway on phase one of the Soda Ash
expansion project, which entails 75,000 tons per annum
Soda Ash Business production capacity, and is expected to come online during
Net Turnover (PKR m) the third quarter of FY 2017-18. The total incremental
capacity of 150,000 tons will be completed over two phases.
June 2016 10,841
On the regulatory front, the order passed by the Directorate
June 2017 11,041
General of Anti-Dumping and Allied Duties (DGAD) to revoke
all anti-dumping duties on imports of soda ash into India
Operating Result (PKR m)
was challenged by Alkali Manufacturers Association of
June 2016 2,856 India in the High Court of Gujrat. As a result, the High Court
passed an interim order barring the customs authority from
June 2017 2,730 issuing any notification on the matter. However, upon expiry
ICI Pakistan Limited Annual Report 2016 -17 83

The Business Executive Team of the Life Sciences Business, Life Sciences Business Agri Division, raised awareness of road
during their Annual Business Conference in Thailand. safety through safety walks in collaboration with Sindh Agriculture
University, Hyderabad and University of Agriculture, Faisalabad.

of the anti-dumping duties, the DGAD issued a notification The Agri Division delivered robust growth over the SPLY,
to all the relevant stakeholders for initiation of the Sunset despite facing challenges including a difficult agriculture
Review and also extended the anti-dumping duties already economy, and adverse weather and water conditions. Growth
enforced up to 2018 until the Sunset Review is concluded. was achieved mainly through the Division’s Vegetable Seeds
At present, the Business is actively working with its counsel and Agrochemicals portfolios.
in India for the submissions to be made in respect to the
Sunset Review. ICI Pakistan Limited completed the acquisition and integration
of Cirin Pharmaceuticals (Private) Limited (Cirin) as a wholly
Going forward, it is anticipated that regional soda ash prices owned subsidiary on December 23, 2016. Through this
will remain under pressure due to the substantial increase acquisition, the Company expects to leverage its newly
(approximately 3 million tons per annum) of natural soda acquired manufacturing capability. Cirin successfully
ash capacity expected by August 2017 in Turkey. This launched its first product post-acquisition; a systemic antiviral
development, coupled with the sustained strength of coal for the treatment of Hepatitis C, under the brand name Sovir
prices, and the expected upward trajectory of metallurgical (Sofosbuvir). Cirin also succeeded in obtaining registration
coke prices in the near future, will likely result in stagnant-to- of Hy-Cortisone in the international market. The integration
under-pressure margins in the coming year. of Cirin into the systems of ICI Pakistan Limited progressed
well and is expected to be completed soon. Going forward,
the major focus will be to capitalise on the manufacturing
Life Sciences Business capacity of Cirin. Alongside this, the intent will also be to
Net Turnover (PKR m) leverage the sales network and marketing capabilities of ICI
Pakistan Limited to broaden the customer base for existing
June 2016 8,710 products, and further enhance product portfolios.
June 2017 11,153
After receiving approval from the Board of Directors for
Operating Result (PKR m) the acquisition of certain assets and strategic brands of
Wyeth Pakistan Limited, the Company has proceeded
June 2016 1,016 with regulatory formalities and is currently in the process
June 2017 1,183 of obtaining the requisite approvals from the Competition
Commission of Pakistan (CCP). The assets of Wyeth Pakistan
Limited being acquired by ICI Pakistan Limited through
The Life Sciences Business achieved a net operating result this transaction include a Wyeth Pakistan Limited-owned
of PKR 1,183 million for the year ended June 30, 2017; 16% pharmaceutical manufacturing facility located on Hawkes Bay
above the SPLY. The Business delivered net turnover of PKR Road, SITE, in Karachi, along with products and registrations
11,153 million. All Divisions posted their highest annual net including the following popular and well-established
turnover, with double-digit growth across all categories. pharmaceutical brands: Entox-P, Lederplex, Lederrif,
Mucaine, Nilstat, TriHEMIC and Wymox. In addition, two
The Pharmaceuticals Division further enhanced its product products and registrations of Pfizer Pakistan Limited are also
offering through new partnerships with Ferrer and Smith included in the acquisition, namely Citralka and Combantrin.
& Nephew. Additionally, a number of new products were
launched in the Nutraceuticals Segment. The future outlook of the Business remains encouraging,
with the launch of new product lines across all Divisions and
The Animal Health Division performed well throughout the the development of manufacturing capabilities alongside
year, driving value growth primarily in the Farmer’s Choice a continuing focus on further strengthening the Business’s
portfolio and Somatech. existing portfolio.
84 ICI Pakistan Limited Annual Report 2016 -17

The Chemicals HR team arranged sessions on road and travel The Chemicals Business Specialty Chemicals Segment,
safety to encourage vigilant and safe travel practices. participated in Global Textile Expo in Karachi, showcasing
the products and services offered to existing and potential
customers.

Chemicals Business Gross profit for the year is 20% higher than the SPLY. This is
principally due to increased volumes and an overall efficiency
Net Turnover (PKR m)
in operations, coupled with reduction and stability in average
June 2016 3,981 raw material prices.

June 2017 4,789 Sales and distribution expenses for the year are 23% higher
than the SPLY, essentially due to increased staff costs, higher
advertising and publicity expenses and outward freight in
Operating Result (PKR m)
line with the Businesses’ growth. Administrative and general
June 2016 462 expenses for the year were 26% higher than the SPLY in line
with the Company’s expansion.
June 2017 569
The Company availed both long-term and short-term
Chemicals Business net turnover for the year at PKR financing facilities from various banks during the year
4,789 million is 20% higher than the SPLY, with improved to manage working capital funding and Business
performance observed across all Divisions of the Business. expansion requirements. Finance costs for the year are
The Polyurethanes Division was the major contributor to only 4% higher than the SPLY; this is despite significant
growth, largely due to increased volumes. In the General investments having been made including funding of the
Chemicals Division, improved performance was driven by acquisition of Cirin Pharmaceuticals (Private) Limited,
the Industrial Chemicals Segment, whereas the Specialty an investment in NutriCo Morinaga (Private) Limited,
Chemicals Division delivered better performance mainly in the and overall business expansion efforts. This was due to
Crops and Adhesives Segments. improved interest rates along with reduction in exchange
losses as compared to the SPLY.
During the year under review, the Business reported its
highest ever operating profit of PKR 569 million, which is Other operating income is 30% higher than the SPLY,
23% higher than the SPLY. This improved performance is primarily due to the higher dividend income from Associate as
attributable to an increase in net turnover driven by several compared to the SPLY.
factors, including: higher sales volumes, an expanded
customer base, and the realised benefits of implemented cost Profit after tax (PAT) amounting to PKR 3,296 million is 16%
efficiencies. higher than the SPLY.

The future outlook of the Business remains encouraging, and Earnings per share (EPS) of PKR 35.69 for the year is 16%
it is expected to continue delivering greater value to all its higher than the SPLY.
stakeholders.

Future Outlook
Finance Going forward, several factors are expected to foster a
The Company’s balance sheet as of June 30, 2017, remains positive atmosphere for investment growth in the country.
on a strong footing, with a current ratio of 1.01 (2016: 1.15) These include: economic development on account of China
and quick ratio of 0.50 (2016: 0.55). The slight decline in these Pakistan Economic Corridor (CPEC) projects; an improved
ratios is due to capital expenditures made towards the Soda security situation; stable inflation and interest rates; and
Ash expansion project. continuing improvement in energy availability, which has
followed the stability in oil prices and the influx of LNG.
Net turnover of PKR 41,364 million for the year under review is This positive atmosphere will further bolster entrepreneurial
12% higher than the SPLY, mainly attributable to higher revenues momentum and enable existing organisations to develop
across all Businesses in light of economic stability, more diverse and expand their lines of business to maximise growth
product portfolio and an enhanced customer base. prospects.
ICI Pakistan Limited Annual Report 2016 -17 85

Zafar Farid (Corporate HSE Manager), talked to attendees during The attendees listened to the speakers intently, during the
the Accident Investigation Workshop in Lahore. Introduction to Engineering Standard Training in Lahore.

Crude oil markets continue to search for a new Rhodes Chartered Accountants as the statutory
equilibrium in light of global economic instability; prices auditors of the Company, subject to the approval
are accordingly expected to remain unpredictable. The of shareholders at the forthcoming Annual General
continuous supply of RLNG into the country’s gas network Meeting of the Company.
provides a viable alternative to other energy sources given
the price hikes in coal and furnace oil. The availability
of RLNG is therefore expected to stabilise margins and Compliance with the Code of
operations in the Polyester Business. In the Soda Ash Corporate Governance
Business, capacity expansion projects are anticipated to As required under the Code of Corporate Governance
further improve the Business’s performance. The outlook incorporated in the Rule Book of the Pakistan Stock
for the Life Sciences and Chemicals Businesses also Exchange Limited (PSX), the Directors are pleased to state as
remains positive. follows:

The Board of Directors of the Company approved the • The financial statements prepared by the management of
establishment of a facility to manufacture Masterbatch, a the Company present fairly its state of affairs, the results
colourant and additive concentrate utilised in the manufacture of its operations, cash flows and changes in equity.
of various plastics (PE, PP, PVC). The estimated project • Proper books of account of the Company have been
cost for this manufacturing facility is PKR 590 million. This maintained.
development is another strategic step towards fulfilling the • Appropriate accounting policies have been consistently
Company’s growth aspirations by enhancing the product applied in the preparation of financial statements, and
portfolio of its Chemicals Business. The project is expected accounting estimates are based on reasonable and
to come online in the first quarter of 2019 and the facility will prudent judgment.
be located at the ICI Pakistan Limited premises 5 West Wharf, • International Accounting Standards, as applicable in
Karachi. Pakistan, have been followed in preparation of financial
statements and any deviation from these has been
The Company remains focussed on serving its customers, adequately disclosed.
strengthening and building stakeholder relationships, • The system of internal control is sound in design and has
expanding and diversifying its product offering, and exploring been effectively implemented and monitored.
opportunities for both organic and inorganic growth, in line • There are no doubts upon the Company’s ability to
with its brand promise, Cultivating Growth. continue as a going concern.
• There has been no material departure from corporate
governance best practices as detailed in the PSX Rule
Acknowledgment Book.
The results of the Company are a reflection of the unrelenting • Key operating and financial data for the last 10 years is
commitment and contribution of its people, and the trust summarised on page 24-25.
placed in the Company by its customers, suppliers, service • Outstanding taxes and levies are given in the Notes to
providers and shareholders. the Financial Statements.
• The management of the Company is committed to good
corporate governance, and appropriate steps are taken
Auditors to comply with best practices.
The present auditors (M/s EY Ford Rhodes, Chartered
Accountants) retired, and being eligible, have offered Investment in Retirement Benefits
themselves for reappointment for the new financial year. The value of net assets available for benefits with respect to
staff retirement funds operated by the trustees of the funds,
As recommended by the Audit Committee, the Board as per their financial statements (audited) on June 30, 2016
has approved the proposal to appoint M/s EY Ford were as follows:
86 ICI Pakistan Limited Annual Report 2016 -17

30-Jun-16 30-Jun-15
Directors’ Training
Value Value
(PKR ‘000) (PKR ‘000) The majority of the Board members have the prescribed
1 ICI Pakistan Management qualification and experience required for exemption from
Staff Pension Fund 1,330,217 1,249,597 training programmes of Directors pursuant to clause 5.19.7,
2 ICI Pakistan Management of the PSX Rule Book in the Code of Corporate Governance
Staff Gratuity Fund 525,697 427,507 (CCG). All Directors are fully conversant with their duties
3 ICI Pakistan Management Staff and responsibilities as Directors of corporate bodies. The
Defined Contribution Board had arranged an orientation course of the CCG for its
Superannuation Fund 643,727 531,243 Directors in the previous years to apprise them of their roles
4 ICI Pakistan Management and responsibilities.
Staff Provident Fund 1,169,750 1,012,617
5 ICI Pakistan Non-Management
Staff Provident Fund 430,848 404,870 Pattern Of Shareholding
A statement showing the pattern of shareholding in the
Company along with additional information as at June 30,
Directors’ Attendance 2017, appears on page numbers F50-F52.
During the period under review, seven (07) Board meetings,
five (05) Audit Committee meetings and three (3) Human As at June 30, 2017, Lucky Holdings Limited, together with
Resource Remuneration Committee (HR&RC) meetings were Gadoon Textile Mills Limited and Lucky Textile Mills Limited
held. Attendance by each Director/Member/CFO/Company held 86.14% shares, while institutions held 5.73%, and
Secretary of the respective Board/Sub-Committees was as individuals and others held the balance 8.13%.
follows:
The highest and lowest market prices of ICI Pakistan
Name of Board of Audit HR & Limited’s shares during 2016-17 were as follows:
Director Directors Committee Remunerations
& Secretary Meetings Meetings Committee
Meetings Highest May 26, 2017 1,219.70
Mr. Muhammad Sohail Tabba 7 - 3 Lowest July 4, 2016 447.92
Mr. Muhammad Ali Tabba 7 5 2
During the year, Mr. Kamal A Chinoy, Director, purchased
Mr. Jawed Yunus Tabba 7 5 3
1,000 shares of the Company. The requisite returns in this
Mrs. Amina A Aziz Bawany 4 - - respect were filed with the regulatory authorities in addition
Mr. Asif Jooma 7 - 3 to informing the Board and the Stock Exchange of the said
Mr. Khawaja Iqbal Hassan 5 4 3
transaction, as required under the CCG. Other than this, the
Directors, CE, CFO, Company Secretary and their spouses
Mr. Muhammad Abid Ganatra
Director & CFO
6 5 - and minor children did not carry out any transactions in the
shares of the Company during the financial year.
Mr. Kamal A Chinoy 6 - -

Ms. Saima Kamila Khan


Company Secretary
7 -
-
Group Financial Statements
Ms. Fathema Zuberi - - 3
The audited financial statements of the ICI Group for the year
Secretary to HR&RC ended June 30, 2017 are attached. The ICI Pakistan Group
comprises of ICI Pakistan Limited, as well as its subsidiaries
Mr. Muhammad Ali Mirza - 5 -
ICI Pakistan PowerGen Limited, Cirin Pharmaceuticals
Secretary to the BAC
(Private) Limited and NutriCo Morinaga (Private) Limited.

Muhammad Sohail Tabba Asif Jooma


Chairman Chief Executive

Dated: July 28, 2017


Karachi
ICI Pakistan Limited Annual Report 2016 -17 87

Statement of Compliance with


the Code of Corporate
Governance
for the year ended June 30, 2017

This statement is being presented to comply with the Code of of any loan to a banking company, a DFI or an NBFI or,
Corporate Governance (CCG) contained in clause no 5.19.24 being a member of a stock exchange, has been declared
of the Rule Book of the Pakistan Stock Exchange Limited for as a defaulter by that stock exchange.
the purpose of establishing a framework of good governance,
whereby a listed company is managed in compliance with the 4. No casual vacancy occurred on the Board during the
best practices of corporate governance. year.

The Company has applied the principles contained in the 5. The Company has prepared a ‘Code of Conduct’ and
CCG in the following manner: has ensured that appropriate steps have been taken to
disseminate it throughout the Company along with its
1. The Company encourages representation of supporting policies and procedure besides being placed
independent, non-executive directors and directors on the Company’s website.
representing minority interests on its Board of Directors.
At present the Board includes: 6. The Board has developed a vision/mission statement,
overall corporate strategy and significant policies of the
Category Names Company. A complete record of particulars of significant
policies along with the dates on which they were
Independent Director Mr. Khawaja Iqbal Hassan approved or amended has been maintained.
Mr. Kamal A Chinoy
7. All the powers of the Board have been duly exercised
Executive Director Mr. Asif Jooma and decisions on material transactions, including
Mr. Muhammad Abid Ganatra appointment and determination of remuneration and
terms and conditions of employment of the CEO and
Non-Executive Director Mr. Muhammad Sohail Tabba other executive and non-executive Directors, have been
Mr. Muhammad Ali Tabba taken by the Board.
Mr. Jawed Yunus Tabba
Mrs. Amina A Aziz Bawany 8. During the year, seven Board meetings were held which
The Independent Directors meet the criteria of independence were all presided over by the Chairman and in his
under clause 5.19.1 (b) of the CCG. absence, by the Vice Chairman of the Board. Written
notices of all Board Meetings, along with agenda and
2. The Directors have confirmed that none of them working papers, were circulated at least seven days
is serving as a director on more than seven listed before the meetings. The minutes of the meetings were
companies, including ICI Pakistan Limited. appropriately recorded and circulated.

3. All the resident Directors of the Company are registered 9. All the Board members have the prescribed education,
taxpayers and none of them has defaulted in payment experience and are fully conversant with their duties and
88 ICI Pakistan Limited Annual Report 2016 -17

responsibilities required under the Code of Corporate 19. The statutory auditors of the Company have confirmed
Governance. During the year, the Board arranged that they have been given a satisfactory rating under
for training as required under the Code of Corporate the quality control review programme of the Institute
Governance, for two of its Directors, while two of the other of Chartered Accountants of Pakistan (ICAP) that they
Directors are exempted based on the criteria stated therein. or any of the partners of the firm, their spouses and
minor children do not hold shares of the Company and
10. No new appointments of the Chief Financial Officer, that the firm and all its partners are in compliance with
Company Secretary and Head of Internal Audit were International Federation of Accountants (IFAC) guidelines
made during the year. on Code of Ethics as adopted by ICAP.

11. The Directors’ Report has been prepared in compliance 20. The statutory auditors or the persons associated with
with the requirements of the CCG and fully describes the them have not been appointed to provide other services
salient matters required to be disclosed. except in accordance with the listing regulations and the
auditors have confirmed that they have observed IFAC
12. The financial statements of the Company were duly guidelines in this regard.
endorsed by the CE and CFO before approval of the
Board. 21. The ‘closed period’, prior to the announcement of
interim/final results, and business decisions, which may
13. The Directors, CE and executives do not hold any materially affect the market price of the Company’s
interest in the shares of the Company other than that securities, was determined and intimated to the
disclosed in the pattern of shareholding. Directors, CE, CFO, Head of Internal Audit, other
Executives and stock exchanges. (‘Executive’ as
14. The Company has complied with all the corporate and determined by the Board is an employee of the Company
financial reporting requirements of the CCG. who is drawing a basic salary of Rs. 2.4 million or more
in a year).
15. The Board has an Audit Committee which has been in
existence since 1992. It comprises of three members, 22. Material/price sensitive information has been
of whom two are Non-Executive Directors and the disseminated among all market participants at once
Chairman of the Committee is an Independent Director. through stock exchange.

16. The meetings of the Audit Committee were held at least 23 The Company has been compliant with the requirements
once every quarter prior to approval of financial results relating to maintenance of register of persons having
of the Company and as required by the CCG. The terms access to inside information by designated senior
of reference of the Committee have been formed and management officer in a timely manner and maintained
advised to the Committee for compliance. proper record including basis for inclusion or exclusion of
names of persons from the said list.
17. The Board has formed an HR & Remuneration
Committee which has also been in operation since 24. We confirm that all other material principles contained in
1997. It comprises of five members, of whom three are the CCG have been complied with.
Non-Executive Directors including the Chairman of the
Committee.

18. The Board has outsourced the internal audit function to


M/s KPMG Taseer Hadi & Co. Chartered Accountants,
who are considered suitably qualified and experienced
for the purpose and are conversant with the policies and Muhammad Sohail Tabba Asif Jooma
procedures of the Company. They are involved in the Chairman Chief Executive
internal audit function on a full time basis. The Head of
Internal Audit coordinates with the internal auditors and July 28, 2017
reports directly to the Board Audit Committee. Karachi
ICI Pakistan Limited Annual Report 2016 -17 89

Review
Report
To the Members on Statement of Compliance with the Code of Corporate
Governance
We have reviewed the enclosed Statement of Compliance Audit Committee, and upon recommendation of the Audit
with the best practices contained in the Code of Corporate Committee, place before the Board of Directors for their review
Governance (the Code) prepared by the Board of Directors and approval its related party transactions distinguishing
of ICI Pakistan Limited (the Company) for the year ended between transactions carried out on terms equivalent to those
June 30, 2017 to comply with the requirements of, Rule that prevail in arm’s length transactions and transactions which
Book of Pakistan Stock Exchange Limited Chapter 5, Clause are not executed at arm’s length price and recording proper
5.19.24(b) of the Code of Corporate Governance, where the justification for using such alternate pricing mechanism. We are
Company is listed. only required and have ensured compliance of this requirement
to the extent of the approval of the related party transactions
The responsibility for compliance with the Code is that of by the Board of Directors upon recommendation of the
the Board of Directors of the Company. Our responsibility Audit Committee. We have not carried out any procedures
is to review, to the extent where such compliance can be to determine whether the related party transactions were
objectively verified, whether the Statement of Compliance undertaken at arm’s length price or not.
reflects the status of the Company’s compliance with the
provisions of the Code and report if it does not and to Based on our review, nothing has come to our attention
highlight any non-compliance with the requirements of which causes us to believe that the Statement of Compliance
the Code. A review is limited primarily to inquiries of the does not appropriately reflect the Company’s compliance, in
Company’s personnel and review of various documents all material respects, with the best practices contained in the
prepared by the Company to comply with the Code. Code as applicable to the Company for the year ended June
30, 2017.
As part of our audit of financial statements we are required
to obtain an understanding of the accounting and internal
control systems sufficient to plan the audit and develop an
effective audit approach. We are not required to consider
whether the Board of Directors’ statement on internal control EY Ford Rhodes
covers all risks and controls or to form an opinion on the Chartered Accountants
effectiveness of such internal controls, the Company’s
corporate governance procedures and risks. Date: July 28, 2017
The Code requires the Company to place before the Karachi
90 ICI Pakistan Limited Annual Report 2016 -17

Business Performance

Sparking Growth with


Innovation
Innovation is often about identifying possibilities that
others do not see. It requires being confident in our
pursuit of new ideas, and fearless about discarding old
ones. It means developing solutions that are flexibile,
agile and responsive to an ever-changing environment.
Through this approach, we transform the way we work,
remaining dedicated to Cultivating Growth on all fronts.

This section outlines the performance and growth of ICI Pakistan Limited’s four
Businesses in 2016-17.
ICI Pakistan Limited Annual Report 2016 -17 91
92 ICI Pakistan Limited Annual Report 2016 -17

Soda Ash
Since 1944, when soda ash production began at our plant in Khewra, the iconic Soda Ash
Business has remained a supplier of choice, consistently producing quality soda ash for a
wide range of applications including the making of glass, detergents and paper. We also
produce food-grade sodium bicarbonate, popularly known as baking soda, which is used in
cooking and baking as well as industrially, in tanneries, textile production, water purification
and poultry feed. Over 70 years after its inception, the Business continues to go from
strength to strength, with expansions underway to increase annual production capacity from
the existing 350,000 tons to 500,000 tons.
ICI Pakistan Limited Annual Report 2016 -17 93

Market Overview Business Performance and Key


During the year 2016-17, the soda ash market witnessed Developments
appreciable growth despite being impacted by energy crises At the Soda Ash Business, we have achieved stellar
and an uncertain political landscape. performance overall, closing the year at 357,843 tons; the
highest ever volume of total sales in a fiscal year, and also 3%
The detergent segment in particular proved a driver of market above the same period last year.
growth, as the demand for branded detergents continued
to surge. The paper segment remained strong, achieving This achievement reflects our focus on remaining the supplier
commendable growth despite being severely impacted of choice in the domestic soda ash market. The Business also
by energy shortfalls, while the silicate segment registered continued to make inroads in the export market, with exports
modest growth. to both India and Afghanistan, which enabled us to establish a
strong foothold in these markets. The export market continues
On the other hand, the bazaar segment remained challenging to remain strong and we expect to cater to its growing demand
with slow growth, while the glass segment witnessed a slight with capacity expansions that are underway.
contraction due to a slowdown in housing construction, as
well as the shutdown of several container glass units. The The year 2016-17 also witnessed the successful
market for refined sodium bicarbonate, however, remained commissioning of the 18 megawatt (MW) steam turbine in
strong. order to improve cost efficiency and enable self-reliance with
regard to energy needs.

The Soda Ash team gathered for a group photograph in front of the Sydney Opera House and the Harbor Bridge, during the annual
customer conference, Sydney, Australia.
94 ICI Pakistan Limited Annual Report 2016 -17

Asif Jooma (Chief Executive), visited the Light Ash expansion Mr and Mrs Suhail A Khan presented medals to students during the
site with Suhail A Khan (VP, Polyester and Soda Ash Businesses). Winnington School’s annual prize distribution ceremony.

Customer Engagement Similarly, the customer conference was held in March 2017
Building and preserving lasting partnerships with our in Australia, with the lively Gold Coast and picturesque
customers has always been a key focus for our Business. city of Sydney on the itinerary. The customer conference
garnered similar benefits; as always, the event proved to be
We undertook several major initiatives during the year to an opportunity to share in our customers’ experiences and
this end, notably a distributor conference in Azerbaijan, understand their expectations more thoroughly in a relaxed,
and a customer conference in Australia, both hosted by our informal atmosphere. The event went a long way towards
commercial department. further strengthening relationships, and was thoroughly
enjoyed by our customers who commended the team’s
The distributor conference, held in October 2016 in the efforts to engage, understand and support them.
beautiful city of Baku, Azerbaijan, enabled us to renew and
fortify ties with our existing distributors. The conference Both conferences achieved the ultimate aim of helping
proved a success, and was well appreciated by all us reinforce our commitment to our key stakeholders,
participants. and to develop and retain mutually beneficial, long-term
relationships.

The Soda Ash team along with distributors visited Baku for the 6th distributor conference.
ICI Pakistan Limited Annual Report 2016 -17 95

The Soda Ash team successfully replaced the calciner ring at The Soda Ash project team laid a new water pipeline using steel
the Soda Ash plant, improving efficiency. mesh reinforced polyethylene pipe.

Challenges provide an impetus to future growth. We expect the effects of


The increasing supply overhang in global markets, particularly CPEC projects to include growth in the construction sector,
originating from Turkey and Eastern Europe, will continue and an increase in urbanisation, including the establishment
to put pressure on domestic market volumes and prices. of new urban centres. These developments will in turn
Additionally, volatility in the prices of energy imports, result in surging demand for products manufactured by our
specifically coal and coke, will be a cause for concern and downstream customers; accordingly, we anticipate higher
will require continual management if improved profitability growth rates in the glass, detergents, and RSB segments.
margins are to be achieved.
In view of the expected increase in domestic demand, and
Challenges faced on the customer front include continued to cater to growing export markets, ICI Pakistan Limited
energy crises, coupled with infrastructural voids that require is carrying out a capacity expansion of 75 kilotons per
resolution. Furthermore, if the unstable political landscape annum (KTPA) which is expected to come online in the third
persists, this may adversely impact the business cycle. quarter of 2017-18. In addition to this capacity expansion,
the domestic competitor is also expected to increase plant
capacity by 100 KTPA, as well. This will in turn drastically
Future Outlook increase domestic surplus capacity. Managing this surplus
Moving forward into 2017-18, opportunities provided by the capacity to maintain market equilibrium will be a key objective
China Pakistan Economic Corridor (CPEC) are expected to for the Soda Ash Business in 2017-18.
96 ICI Pakistan Limited Annual Report 2016 -17

Life
Sciences
The Life Sciences Business of our Company has a clear, compelling purpose: the mission of
Improving Lives. With three diverse and growing Divisions, Pharmaceuticals, Animal Health,
and Agri, the Life Sciences Business has a direct impact on countless lives across the
country. Through these Divisions, we promote better health and wellbeing for people across
Pakistan; better veterinary practices and nutrition in the poultry and livestock industries; and
improved crop quality and farming practices in the agriculture industry.
ICI Pakistan Limited Annual Report 2016 -17 97

In a terrific show of teamwork, the entire Life Sciences Business team came together to execute a human formation of the letters ‘ICI’
on the beach at Hua Hin, Thailand, during the Life Sciences Annual Business Conference 2016-17.

The Life Sciences team forms the ‘ICI’ letters during their Annual Business Conference in Istanbul, Turkey

Pharmaceuticals Division
Market Overview The Oncology Segment led the way with NSI growth of 39%
The pharmaceuticals industry of Pakistan continued to grow, over the previous year. The top performer of the Segment
recording a growth of 16%, reaching a value of PKR 324 proved to be the Meronem brand, which reached the sales
billion in 2016-17. milestone of one billion rupees. The Cardiology Segment
also staged a strong recovery, registering growth of 12%,
Several key developments were observed in the which was achieved through the revitalisation of marketing
pharmaceuticals market in 2016-17. One of the prime drivers efforts and a focus on retail sales. Our key cardiology brand,
of the above-mentioned growth was the launch of a new Tenormin, closed the year at PKR 940 million, posting 8%
Hepatitis C drug. This was followed by a number of new growth. Other brands driving the Segment’s growth included
entrants into the Hepatitis category, looking to capitalise on Inderal, Etipro and Icef.
this high-growth market.
In the Primary Care Segment, we had several key highlights
On the regulatory front, the Drug Regulatory Authority of Pakistan during the year. These included the launch of eight new
(DRAP) allowed the industry a CPI-based price increase for the brands; leveraging our Nutraceuticals manufacturing facility
first time under its new policy. The increase, albeit small, was fully; and the commercialisation of our toll manufacturing
welcomed by the industry as a clear mechanism had been business for two pharmaceutical companies, PharmEvo
defined by the regulator. (Private) Limited and Scilife (Private) Limited, which enabled
us to maximise capacity utilisation.
ICI Pakistan Limited made headlines with two strategic
acquisitions; the first being Cirin Pharmaceuticals (Private) The year 2016-17 also saw the realisation of two strategic
Limited, a local company with a multi-category manufacturing acquisitions, Cirin Pharmaceuticals (Private) Limited
facility located in Hattar and strong presence in several key (Cirin) and Wyeth Pakistan Limited-owned brands and
market segments. The second was the strategic acquisition manufacturing assets (completion of the latter is subject to
of certain Wyeth Pakistan Limited-owned assets, including regulatory formalities). These acquisitions are a milestone for
several key brands and a manufacturing facility based in our Company, and they provide the Pharmaceuticals Division
Karachi. Regulatory formalities for the completion of this with exciting new opportunities in high growth markets,
transaction are under way. including access to a wider category of therapeutic areas.
This greatly enhances our overall presence in the healthcare
Business Performance and Key Developments segment.
The Division closed the year on a strong note, with net sales
income (NSI) of PKR 4.31 billion, demonstrating appreciable The integration of Cirin’s business portfolio began by mid-
growth of 15% over the previous year. year, with a key focus on team restructuring, and training and
skills development. We also worked on realigning our sales
98 ICI Pakistan Limited Annual Report 2016 -17

ICI Pakistan Limited management along with management from Senior management of both ICI Pakistan Limited and Cirin
Pfizer Pakistan Limited during the APA signing ceremony for Pharmaceuticals (Private) Limited on the closing of the Cirin
certain assets of Wyeth Pakistan Limited. acquisition.

channel mix to improve focus on retail sales. In addition to have helped us evolve from conventional medical marketing
this, several key brands were launched in the retail market to a more diversified, direct-to-consumer approach. This was
which were previously only being marketed to institutions, especially relevant given the growth of our nutraceuticals
including Tazopip and Stanem. We were also successful in and OTC portfolio, and a subsequent need to make these
launching our own Hepatitis C molecule, by the brand name products more accessible to consumers.
Sovir. On the operations front, the Cirin manufacturing facility
received ISO 17025 certification, making us one of the first Another highlight of the year was the realignment of our sales
companies in Pakistan with this distinction. A number of channel to ensure stronger focus on retail sales, especially
improvement and upgradation initiatives were also carried for key brands including Tenormin. The sales and marketing
out to improve manufacturing capability, processes and teams were restructured and aligned to meet the growth
compliance levels. ambitions of the coming year. As part of our ongoing effort to
adopt innovative processes and tools that improve efficiency,
Our focus during the year extended beyond the local market, as the strategic and highly critical Sales Force Excellence (SFE)
the Pharmaceuticals Division continued to forge strong business programme was rolled out successfully and on target. The
partnerships with global companies. A significant development SFE programme enables improved planning, execution and
in this area was the signing of a marketing and distribution monitoring of customer coverage through the use of a digital
agreement with UK-based Smith & Nephew, a company that database which allows, among other things, monitoring of
currently markets its advanced wound care management call frequency, days in field, and adherence to plans.
portfolio in over 120 countries worldwide. We envision significant
potential for this portfolio in the Pakistan market. Work was also begun on a strategic project for product
packaging. The objective of this project is to standardise all
Our partnership with Spanish healthcare giant Ferrer Pharmaceuticals Division product packaging by applying one
continues to go from strength to strength. Of particular consistent visual identity across the board to all applicable
significance was the launch of premium skincare brand products. This will unify our product line, aiding in recognition
Repavar, the Division’s first foray into the skincare industry, and recall. It will also aid in boosting visibility and recall of the
specifically the cosmeceutical and beauty salon segment. ICI Pakistan Limited corporate brand.
Our successful entry into this segment was marked by the
grand Repavar launch event held in Karachi in November Customer Engagement
2016. The launch ceremony was attended by leading Our customer engagement initiatives this year centred on
dermatologists, key beauty salon owners, and celebrities. diversifying and modernising our existing engagement
Repavar’s successful launch has been supported by a programmes. While we maintained our focus on engaging
number of initiatives including salon branding and training, with customers to share medical knowledge and product
social media campaigns and introduction of the brand to information via one-on-one discussions, informative
dermatologists. symposiums and conferences, we also undertook a number
of Continuing Medical Education (CME) programmes and
The online launch of HealthNWellness, the umbrella for our Patient Benefit Schemes (PBS) serving the community at
nutraceuticals and over-the-counter (OTC) portfolio, marked large at clinics by organising triglyceride camps on Ovaza,
another new avenue for reaching out to our customers. A hypertension awareness camps on the Cardiovascular
new website dedicated to the portfolio, as well as social portfolio and OPD camps on a number of other brands,
media presence, attracted consumers online. These initiatives among many other initiatives.
ICI Pakistan Limited Annual Report 2016 -17 99

Eduardo Yanovsky of Ferrer spoke to the audience about The Pharmaceuticals Divison launched the Smith & Nephew
Ferrer’s operations and the Repavar brand, during the launch of advanced woundcare portfolio in Pakistan.
Repavar in Pakistan.

Challenges Plans are also in place for the expansion of sales teams, as
Many of the major challenges faced by the Division during the well as the launch of a dedicated trade team. These teams
year were successfully overcome. One of these was to revive will be complemented and supported by robust brand and
and grow sales of Tenormin, which had slowed in the recent customer engagement plans.
past due to various reasons. Through revitalised marketing
campaigns and focussed sales execution, Tenormin sales A key strategic thrust going forward will be to drive top line
rebounded, registering 8% growth. The strategic sales growth through investment and focus on building big brands.
structure put in place last year now enables us to effectively There is also renewed focus on team skills development,
commercialise the incoming Wyeth Pakistan Limited portfolio. placement and use of analytics. We aim to further build
The integration of Cirin’s operations into the Life Sciences on our strategy of diversifying and modernising marketing
Business domain also provided exciting new challenges for channels, as well as building a strong and sustainable retail
our Business team, as did the task of developing commercial sales model for key brands, most notably Tenormin.
and operational plans for the Wyeth acquisition.
With the incoming Wyeth Pakistan Limited and Cirin brands
Future Outlook integrated into the ICI Pakistan Limited portfolio, and
Our primary focus in the coming year will be to continue expansion plans in place for our sales teams, the training
the strong growth momentum achieved in 2016-17 by function is also marked for expansion and reorganisation.
consolidating our existing portfolio, and through successful This will help in further enhancing the role of training in
integration of both Cirin and Wyeth Pakistan Limited portfolios upgrading our teams’ technical and soft skills.
for delivery of results from these new ventures as per plan.
We have renewed our commitment to leverage best practices By conducting regular cycle meetings and frequent
and help forge synergies between segments and portfolios. trainings, and encouraging the use of IMS data and the SFE
We will continue to focus on developing a robust nutraceutical programme, the Pharmaceuticals Division is confident of
and cosmeceuticals pipeline, as well as capitalising on toll its ability to forge a strong alliance between strategic brand
manufacturing opportunities. We also intend to forge ahead plans and driving executional excellence, and in doing so,
on a decisive plan to penetrate into export markets, looking delivering enduring value for 2017-18 and beyond.
beyond Afghanistan. Additionally, with the added capability of
two pharmaceutical manufacturing facilities now available to
us, we are determined to develop an even stronger portfolio
of pharmaceutical brands.
100 ICI Pakistan Limited Annual Report 2016 -17

The Animal Health Division conducted a deworming campaign in The Animal Health Division sponsored the International
collaboration with WWF in Nagarparkar, Sindh. Livestock Nutrition Summit, which aimed at improving the future
prospects of the livestock and poultry industries.

Animal Health Division


Market Overview During 2016-17, the sector contributed 1.4% to the country’s
In 2016-17, the livestock sector in Pakistan recorded 3.43% GDP, while its contribution to the agriculture and livestock
growth, maintaining the stable growth observed over the markets stood at 7.1% and 12.2% respectively. Value-added
last two years. Keeping in view the constant cost factor of poultry products at the current cost factor have increased
financial year 2005-06, gross value addition of the livestock from PKR 151.1 billion in 2015-16 to PKR 162.8 billion in
sector increased by 3.4% in 2016-17 over last year (from 2016-17, an increase of 7.7%. In an interesting contrast to
PKR 1,288 billion in 2015-16 to PKR 1,333 billion in 2016-17). the more unorganised livestock sector, the poultry industry
Factors that contributed to this demand growth included is distinguished by rapid mechanisation, the introduction of
population growth, urbanisation, rising per capita income integrated farming systems, superior bio-security, and value
and lucrative export opportunities. At present, the livestock addition through sizeable investments.
sector constitutes a significant 58.33% of the country’s total
agriculture sector, which itself accounts for 19.5% of the Business Performance and Key Developments
national GDP and employs 42.3% of our national labour force. Overall, the Animal Health Division has registered net sales of
PKR 4.33 billion for the year 2016-17; a robust growth of 40%
Positive developments in the livestock industry include an over the same period last year.
increase in production over last year of its two main products,
milk and meat, by 3.2% and 4.9% respectively. Furthermore, Our own-brands portfolio, under the Farmer’s Choice
due to a large livestock population and suitable climate, umbrella, delivered sales of PKR 1.61 billion, a healthy
Pakistan has succeeded in establishing itself as the fourth growth of 30% over the same period last year, establishing
largest global milk producer. The livestock market, however, the Farmer’s Choice range as a major component of the
as a whole remains largely basic and unorganised. This Division’s comprehensive portfolio.
poses a challenge with regard to the adoption of technology
for the mechanisation of farming, since our large livestock Our cattle feed product, Farmer’s Choice Vanda, experienced
population is scattered across numerous small holdings growth of 26%. Sales of Somatech recorded remarkable
instead of being concentrated on larger farms. The average growth of 75% over last year, despite challenges experienced
farm holding at present consists of fewer than six animals. in Punjab.

These challenges notwithstanding, the livestock sector In collaboration with UK-based Cogent Breeding Ltd, a
remains a promising avenue for consistent growth. Currently, company renowned for its expertise in bovine genetics, we
despite its status as a major milk producer, Pakistan lags far managed to penetrate into the local artificial insemination
behind the world average per capita consumption of milk and market, securing a market share of 7% within only nine
meat. This statistic alone is a strong indicator of the potential months of launch. We are currently evaluating the possibility
for growth in this sector. of entering into bovine semen production for indigenous
breeds, to fill a current gap in the availability of quality bovine
A subset of the livestock sector, the poultry sector is semen in the market.
another major contributor to Pakistan’s agriculture industry.
The poultry sector accounts for the indirect and direct We were also proud to celebrate the first anniversary of
employment of approximately 1.5 million people, and 31% of successful operations at our Veterinary Pharmaceuticals
total meat production in the country. At present, investment Plant, made possible by the team’s outstanding efforts and
in the poultry industry is estimated at over PKR 700 billion. enduring focus on quality.
ICI Pakistan Limited Annual Report 2016 -17 101

Members of the Animal Health Division and Cogent Breeding Dr. Denis, technical manager from MSD, shared the advantages
Ltd. teams along with government officials, at a seminar of F Vax-MG during a seminar on flock management.
launching Cogent in Pakistan.

New product launches: Strengthening our product a significant event that aimed at bringing together leading
portfolio is an ongoing objective for us at the Animal Health researchers to review and discuss emerging issues in the
Division, and during the course of the financial year, we fields of agriculture, food and animal sciences, as these have
launched six new products; one in the Livestock Segment the potential to significantly impact industries, consumers,
and five in the Poultry Segment. and the environment. Technical managers of collaborating
companies were invited to this event to effectively address
In the Poultry Segment, we launched F Vax-Mg Vaccine in issues faced at the farm level, and create greater awareness
collaboration with MSD Animal Health. This vaccine aids among farmers regarding the use of quality products.
in the eradication of Mycoplasmosis, a common bacterial
infection in poultry. We also launched superior quality Alongside such campaigns and events, we continued to
probiotics Growforte and Lactigrow, from Mervue Laboratory, ensure that our teams are regularly trained on new product
Ireland. As part of our Farmer’s Choice portfolio, we launched technologies, the latest farm management practices and
two new antibiotics, Co-Spira and Bio-Amoxyline. These are key industry challenges. This added tremendous value by
indicated for the treatment of Salmonellosis, E coli infections, enabling our people to offer better, more innovative and
necrotic enteritis and fowl cholera. technologically sound solutions to customers. Our teams
also engaged in ongoing campaigns and corner meetings
In the Livestock Segment, we successfully launched Cobacaten to increase customer awareness on major animal health
LC (a fourth-generation cephalosporin containing cefquinome issues and their subsequent preventative measures. These
sulphate) in collaboration with MSD Animal Health. measures have had the added advantage of building
relationships and forging new ties in our communities.
Customer Engagement
We continued to build on the Company’s value of Customer Challenges
Centricity by engaging meaningfully with our customers to During the year 2016-17, the animal health industry continued
develop farming communities, empowering farmers with to be plagued with the influx of low-quality, low-priced
awareness and knowledge that helped them enhance generics, both locally-produced and imported. Other
productivity, and eventually, profitability. The topics we significant challenges included a farmer base that requires
engaged with our customers on included; better farm continuous education, and the management of input costs.
management practices, breed development, biosecurity and Specifically, this challenge related to keeping the costs of
nutrition. We continued to conduct awareness campaigns to quality inputs for Farmer’s Choice Vanda competitive.
reach farmers in rural communities across Pakistan.
Future Outlook
Among the customer engagement initiatives taken by us in Our strategy for the future is focussed on growth and
2016-17 were technical sessions for customers and talks innovation. We intend to achieve this by enhancing our
by foreign delegates invited to share insight on current product and brand portfolio to cater to newer and more
challenges in the livestock and poultry industries. We diverse segments of the animal health market than before.
organised the Third International Conference on Agriculture, In addition, we intend to enhance our biological portfolio by
Food and Animal Sciences, as well as sponsoring the expanding into new partnerships in both, the livestock and
International Livestock Nutrition Summit. This summit was poultry sectors.
102 ICI Pakistan Limited Annual Report 2016 -17

The Agri Division team participated in World Food Day, setting In January 2017, the Agri Division Seeds team arranged a
up stalls to share information on the Company’s efforts in the seminar at the Livestock Extension Department to launch silage
field of food agriculture. in Balochistan.

Agri Division
Market Overview during 2016-17 against 0.59% during the same period last
The agriculture sector plays a central role in national year, due to a decline in the production of vegetables and
development, food security and poverty alleviation, oilseeds which posted negative growth of 0.73% and 5.93%,
contributing to 19.5% of the gross domestic product (GDP). respectively. With these difficult conditions, farmers struggled
Agriculture can rightly be considered the lifeline of Pakistan’s throughout the year to earn sustainable incomes.
economy. The industry employs 42.3% of the country’s
labour force, and provides the necessary raw material for A similar trend of dominance is observed in the vegetable
several value-added sectors. seeds industry with regard to OPVs. The vegetable
seeds segment continues to function as an unorganised,
As always, the growth and output of the agriculture sector unstructured segment within which many local distributors
remains dependent on a number of significant, largely compete. The pesticides industry continues to be focussed
uncontrollable external factors including farm economics largely in the insecticides segment, with awareness for
and environmental conditions. During 2016-17, the herbicides and fungicides remaining low.
agriculture sector rallied strongly after the serious downturn
it experienced the previous year, achieving growth of 3.46% Business Performance
against a target of 3.5% - a massive leap from last year’s The year 2016-17 proved to be a challenging one for the Agri
meagre growth of 0.27%. Division. Despite this, net sales income (NSI) for the Division
for the year was recorded at PKR 2.5 billion; a substantial
This growth was driven by several factors. These included growth of 35% over same period last year. This growth was
more successful harvests of major crops (as a result of recorded with aggressive marketing plans, a strong pipeline
improved availability of vital agricultural inputs such as water); of new products and innovative demand generation activities.
agriculture credit, and intensive offtake of fertilizers. Major
crops such as wheat, sugarcane, cotton and rice continue In the Seeds Segment, challenges experienced in the
to be the primary contributors to the agricultural sector. In previous year persisted, with low sales of sunflower seeds.
the seeds industry, the open pollinated variety (OPV) remains However, the Segment shifted its focus to further developing
the preferred choice, with the OPV seed market dominating its hybrid corn seed product, which was successfully
the industry with over 73% market share. The trend of launched last year. The Segment also worked to maintain its
hybridisation, however, is on the rise in recent years, and is position in the vegetable seeds segment, achieving growth of
likely to shape the industry over the next five years. 23% over the same period last year. This was achieved owing
to strong presence created through products such as hybrid
Production growth trends observed for most major crops okra, hybrid hot pepper, peas and tomatoes.
were mixed, with significant recovery over last year for some,
while others struggled. Maize production increased 16.3% The Agrochemicals Segment performed exceptionally well,
against 6.77% last year; sugarcane, 12.41% against 4.23%; recording a remarkable growth of 74% over last year. The
cotton, 7.59% against -28.96%; and rice, 0.71% against Segment’s three key brands for the year were Ulala, Lancer
-2.88% last year. Wheat production growth remained low at Gold and Total. We are pleased to report that ICI Pakistan
0.46% compared to 2.18% last year. Other crops accounting Limited now numbers among the top ten companies
for 11.03% in value addition of agriculture, grew by 0.21% operating in the agrochemicals industry, a position that we
ICI Pakistan Limited Annual Report 2016 -17 103

The Vegetable Seeds segment introduced biodegradable shopping bags for farmers as an alternative to plastic shopping bags.

have achieved within a mere three years of the Segment’s as marked changes in the duration and timing of seasonal
launch. rains. All of this has had a significant impact on crop yields.

Customer Engagement Economic factors also played a part, including slow


A strong customer focus continues to be an ongoing priority. economic growth, high input prices, and a decrease in
To serve our customers better, we ensured that our customer global agriculture commodity prices. Water and electricity
engagement programmes remain responsive, adapting to the shortages also remained prevalent. These factors combined
varying needs of different customers across the country. to negatively impact the ability of farmers to invest in farm
inputs.
In 2016-17, the Agri Division focussed on consolidating
its agrochemical and vegetable seeds portfolios while The nature of the agriculture industry is also a challenge, as
maintaining and strengthening its existing portfolio of field market practices are often unorthodox, while the supply chain
crop seeds. Sixteen new products were launched; these model of the industry itself is complex. Farmers have limited
included ten agrochemicals products, two products for field access to formal credit, which affects their ability to make the
crops and four vegetable seeds products. necessary financial investments to enhance crop quality and
yield. Another persistent challenge in the industry is a lack of
Our sales and development staff held regular trainings for standardisation, and poor controls. As a result, the market
farmers on the latest production technologies and on more is flooded with inferior quality seeds and agrochemicals
efficient farm management practices. The Agri Division products, which erode the market share of legitimate, quality
succeeded in reaching 250,000 farmers across Pakistan. products as well as affecting the outcome of crops.

Our retail partners are of great significance to us, since Future Plans
they play an important part in ensuring that our product is The government has expressed intentions to promote
available to farmers. Aligning closely with them and ensuring agriculture, and if concrete steps are materialised,
solid partnerships based on good communication is therefore improvements in the sector will take place. The Agri Division
vital to the Agri Division’s operations. To this end, during the is geared to achieve aggressive growth in the coming years
year, we undertook a series of business partner conferences through strategic plans that have been put in place for
that including various training sessions and discussions on a the development and growth of the Division, focussing on
range of pertinent topics. consolidating existing strengths and diversifying our portfolio
further to provide greater value to customers. With these
Challenges plans in place, we are confident that we are well-poised to
During 2016-17, the majority of challenges faced in the continue to grow and expand our footprint in line with the
previous year persisted. These included the effects of climate Company’s ambitions.
change: variations in weather patterns led to subsequent
changes in the duration and severity of the seasons, as well
104 ICI Pakistan Limited Annual Report 2016 -17

Chemicals
For decades, our Chemicals Business has been adding value to practically every industry in
Pakistan. The Business is divided into three primary divisions; Polyurethanes (PU), General
Chemicals (GC) and Specialty Chemicals (SC), with each Division further focussing on key
products and segments through marketing, trading and manufacturing.
Over time, we have witnessed significant growth through the continued expansion of our
product portfolio, increase in market share and the application of innovative solutions. As
a leading supplier in all major industrial sectors, our unparalleled commercial and technical
expertise guides the Business through new ventures, development efforts and investment
opportunities, with all aspects focussed on continuously improving the customer experience.
ICI Pakistan Limited Annual Report 2016 -17 105

Arshaduddin Ahmed (GM, Chemicals Business), centre, along with team members at the Global Textile Expo, Karachi.

Future Outlook
General Chemicals A structured approach is in place for the GC Division.
Market Overview and Business Performance Our business development team will continue to lead the
Our General Chemicals (GC) Division, the trading segment of Division’s expansion into new markets and categories,
the Business, is divided into the Consumer Chemicals and while the focus for existing Segments will continue to be on
Industrial Chemicals Segments. The Division is vast, and is supplier management, enhancing the product portfolio and
positioned to provide a wide range of chemicals to more than expanding the customer base through segment-level market
350 customers across 40 industries, representing more than development. In addition, the overall focus will remain on
35 global suppliers. enriching our value proposition, which would acquire new
customers as well as improve the satisfaction of our existing
During the year, our GC Division witnessed considerable customer base.
growth driven primarily by the improved performances in
the Industrial Chemicals Segment. Its status in a market
which includes both base raw materials as well as paints and Polyurethanes
coatings, remained favourable as a result of the increase in Market Overview and Business Performance
customer demand. Taking advantage of this, we also made Our Polyurethanes (PU) Division extended the previous year’s
significant progress in expanding our customer base by stellar performance to the current year under review. Several
entering into the pharmaceutical and engineering plastic key factors contributed to this continuing robust performance,
industries. such as the higher GDP and per capita income. These factors
triggered an increase in downstream demand from customers
Performance in the Consumer Chemicals Segment has and led to a rise in the purchase of PU-based products. The
strongly been tied to the economic growth of the country. automotive and appliances industries, in particular, posted
Following the growth of the food and beverage industry, double-digit growth on the back of a favourable economy.
during the year under review, the Segment also benefitted Other factors, such as improved infrastructure and low
with improved results. interest rates, also played a part.

Challenges Excellent performance through the year led to higher sales


Our GC Division continues to face fierce competition in a volumes and subsequently, an increase in market share. We
market with prevalent aggressive pricing strategies. Our were able to meet rising demand from our customers through
Division is aware of the competition, and has thus put in place efficient inventory management. The Division was also
various strategies and initiatives to enable our evolution and successful in expanding its customer base through effective
progress with market dynamics in mind. sales pipeline management, efficient execution of account
106 ICI Pakistan Limited Annual Report 2016 -17

Chemicals Business Polyurethanes Segment, launched Colleagues during the Chemicals Business outbreak at the
Polypropylene Glycol (PPG) in the polyurethane market of Dreamworld Resort, Karachi.
Pakistan.

strategies and excellent technical support. Furthermore, the Specialty Chemicals (SC)
Division also successfully entered into the mattress segment
of the PU market. Market Overview
Our Specialty Chemicals Division serves as the manufacturing
Challenges arm of the Chemicals Business. Following the previous
The PU Division experienced a fair share of challenges during year’s restructuring, the Division’s key Segments are now
the year under review, particularly the supply shortages Textiles, Adhesives, Crops and the newly added Water
in the Chinese polyurethanes market. This was further Treatment Chemicals Segment. Each of these segments is
intensified with pressure from consistent competition in vital to Pakistan’s economy. Our products are widely used
Pakistan’s market, from new and existing players. In the in numerous industries and include: textiles auxiliaries which
face of all this, our Division was successful in tackling most enable fabric processing; crop protection emulsifiers used to
of these challenges through varying strategies. As a result, enhance the effectiveness of pesticides; adhesives crucial in
we managed to extend our leading share in the market and construction; and water treatment chemicals used for cooling
strengthened our position in almost all segments through water and boilers.
improvements in product quality, effective sales planning and
responsive technical support. During the year, lower exports in textiles and growing
competition among chemical suppliers applied continuous
We have witnessed a rise in market competition from pressure on the textile market. Despite these challenges, the
both traders and agents, who are aggressively pushing Textiles Segment achieved its highest ever sales volumes. In
their products with low prices in an effort to challenge 2016-17, our Crops Segment continued to show promise, as
our leadership. We remain determined to counter these its success was mainly driven by a better product mix.
challenges, primarily by: extending our competitive edge;
increasing market share in all segments through excellent Business Performance and Developments
customer service; developing and implementing value Performance in the Division’s Segments was significantly
addition programs; and maintaining competitive prices while positive. Despite ongoing market challenges, our Textile
focussing on product improvement. Segment achieved record high sales volumes with a 6%
increase over the same period last year. Several factors
Future Outlook influenced this success, including better customer relationship
We will maintain our approach to continue to aggressively management, an increasingly diverse product range, and
sustain market leadership in established product lines key market penetration. The Adhesives and Crops Segments
while evolving and improving our offering to customers. recorded their highest annual net turnover over the year,
Account specific strategies will be developed to maintain and with growth of 15% and 47% in volumes, respectively. New
constantly improve relationships with our key customers. And developments played a key role in the growth of Adhesives,
the Division has begun coordinated efforts to explore new particularly in the furniture and non-woven sectors. This helped
and untapped areas of the PU market. us expand our options in the Segment. The exceptional growth
in the Crops Segment is attributed to consistent innovation
and a focus on customer base expansion. Also, substantial
groundwork was laid to foster networks with international
players and expand our product reach.
ICI Pakistan Limited Annual Report 2016 -17 107

Customer Engagement Customer Engagment Survey


With our customers at the core of everything we do, and Components
Customer Centricity being one of our core values, we carried
out various customer engagement initiatives.
• The Textiles and Water Treatment Chemicals team Overall
participated in the GTex Textile Exhibition during January Company
image
2017. The aim was to promote ICI Pakistan Limited as
a serious player in the segment and develop new and
Engagement Product
promising customer leads. activities quality
• Our Adhesives team continued to make significant
strides in the wood working market through multiple
carpenter meetings in Lahore and Faisabalad during the
final quarter of the year. Survey
• Following the previous year’s practice, we successfully components Overall sale
process from
conducted a customer engagement survey for the Website
PO to
Division during the year under review. More than 80 delivery
active customers across all four Segments were
contacted. Their feedback was recorded on several
processes including product quality, sales process,
Complaint
sales staff behaviour, troubleshooting, information solving Sales staff
availability and overall customer engagement. The
results of this survey will aid in developing the customer
engagement plan for the coming year.
Rating scale of 1-5 was used to quantify customer response.
Challenges Response highlights were incorporated in survey. Net promoter
Throughout the year there were substantial challenges in score (NPS) tool was deployed to assess customer loyalty.
Pakistan’s textile market that persist. As a result, customers
remain hesitant on the back of declining exports and
margins. Despite this, growth in sales volumes was delivered in enhancing market share through value creation for
by focussing on core strengths which include stiffeners, our existing and new customers. Also, focussed efforts
softeners and special finishes. are planned across the board to minimise raw material
procurement costs and maximise margins. This will not only
Future Outlook benefit the Division’s bottom line, but will also allow us to
Going forward, tech-commercial innovation will continue be more competitive in the market, further enhancing our
to be the Division’s forte, as we make consistent strides market share.

As part of the ongoing focus on team engagement, General Chemicals and Specialty Chemicals’ marketing and sales teams visited
Naran-Kaghan Valley.
108 ICI Pakistan Limited Annual Report 2016 -17

Polyester
Our Polyester Business remains one of the major producers and preferred suppliers of
Polyester Staple Fibre (PSF) to Pakistan’s textile industry. PSF production in Pakistan was
pioneered by our Company in 1982, since which time we have continually innovated to
provide variants and specialised fibres, enabling the local textile industry to produce diverse,
varied products in keeping with the evolving demands of the global market.
ICI Pakistan Limited Annual Report 2016 -17 109

The Polyester Business arranged a customer conference in Estonia and Latvia. Asif Jooma (Chief Executive), Suhail Aslam Khan (VP,
Polyester and Soda Ash Businesses), Polyester Business Executive team and the customers came together for a group photograph.

Market Overview Business Performance


PSF is manufactured using two main raw materials, both During the year, the pressures faced by the oversupplied
of which are derivatives of crude oil: pure terephthalic acid regional PSF industry were subsequently experienced
(PTA) and mono-ethylene glycol (MEG). Crude oil, therefore, by domestic PSF manufacturers as well. The challenging
continues to play a key role in PSF production, pricing and scenario persisted, due to continuing PSF imports –
more. predominantly from China – and the prevailing oversupply of
PSF in both regional and domestic industries. Our Business’s
In the financial year 2016-17, crude oil remained volatile, initially margins remained under pressure as a result of this state of
increasing and then falling with factors working both for and affairs. However, to mitigate the impact of this situation, we
against its price. One major factor working against crude focussed our efforts on a number of internal cost reduction,
prices was the global oil glut which persisted and was further quality and efficiency improvement initiatives. We are pleased
exacerbated by build-up of crude inventory in the United States. to report that, despite continuing adverse market conditions,
However, on average during the year, crude prices increased these initiatives enabled the Polyester Business to deliver
due to the output freeze implemented by OPEC and non-OPEC stellar performance against key objectives (including market
members. Likewise, the prices of feedstock, including paraxylene share, sales, operating efficiencies, etc.).
(PX), PTA and MEG, all remained bullish before declining in line
with the crude oil market.
Key Initiatives / Developments
Cotton is another crucial commodity affecting the PSF • We successfully represented the Polyester Business in
market; the natural fibre is a key substitute to PSF. In FY 2016- litigation attempts filed by Chinese exporters in the Anti-
17, global cotton demand exceeded supply for the second Dumping Appellate Tribunal and High Courts of Pakistan
consecutive year. Cotton prices increased internationally as to contest the final determination of the ADD case. We
stockpiles in China tightened. This had a trickle-down effect secured a positive outcome against these litigation
on the domestic front, with local cotton prices surging as high attempts last year.
quality cotton remained in demand.
• Our Business was strongly represented at all available
Anti-Dumping Duties (ADD) imposed on Chinese PSF imports forums relating to Free Trade Agreement (FTA)
provided some measure of relief to the pricing and demand negotiations with Turkey and Thailand. The Business
dynamics of domestic PSF, however, the local industry team attended numerous seminars, meetings and
was unable to truly benefit from this development. Firstly, conferences held by the various Ministries (Commerce,
the imposed ADD was too low to be effective, in addition, Textile, etc.) to provide our recommendations and voice
PSF imports from non-Chinese sources increased, as did our concerns regarding PSF tariff settlement.
polyester-based yarn imports.
• Market share of Terylene Black (black polyester fibre)
stands at 47% and continues to grow; a testament to
110 ICI Pakistan Limited Annual Report 2016 -17

Awards were presented at the Polyester Business Customer The Polyester Business celebrated World Environment Day by
Conference. carrying out tree plantation and an awareness walk.

this innovative product’s contribution to our Business As part of our ongoing customer-centric approach,
portfolio. Terylene Black was launched to address the we organised the sixth Polyester Business Customer
spinning industry’s demand for coloured yarn. Post- Conference in Latvia and Estonia, appropriately titled
launch, the product received widespread appreciation ‘The Baltic Connection.’ This bi-annual event provides
from customers, and occupies significant market share in us the vital opportunity to strengthen our enduring
a segment traditionally dominated by imports. relationships with our customers by actively engaging with
them, understanding their needs and concerns through
• We utilised our previously idle batch assets to feedback and discussion, and providing focussed support
manufacture various product variants which contributed and solutions. The conference garnered overwhelmingly
positively to the bottom line. positive feedback from customers who appreciated our
ongoing efforts in the face of a challenging business
• We successfully implemented the second phase of our environment.
cost-saving initiatives project to further bolster Business
profitability in the face of continued external pressure A new customer engagement initiative pioneered by our
on margins. Several initiatives were also taken on the technical team was the two-day Technical Customer
manufacturing front to improve plant efficiencies and Conference organised at Greenfields Country Club, in the
product quality, while simultaneously reducing business outskirts of Lahore. This event brought the technical directors
costs substantially. of textile mills together with our Polyester Business teams
for the first time in an informal, relaxed setting, encouraging
• During the year, we remained focussed on increasing frank and open dialogue on important issues. The conference
employee engagement through a number of initiatives. Our proved to be a great success, further strengthening our
success in this area was reflected in the annual employee relationships at the mill level with open communication. We
engagement survey conducted across the Company in plan on organising such conferences as a regular feature
partnership with Gallup; survey results showed a substantial going forward.
increase in our Business-wide engagement score.
We also conducted an independent customer feedback
survey for the second year running. This second round of the
Customer Engagement survey not only allowed us to better understand customer
Our customers are of the greatest importance to us, and our perception regarding our products and services, it also
ongoing customer focus is reflected in our remarkably loyal enabled a comparison of the past two years’ performance,
customer base. In fact, our average customer relationships helping us gauge our progress and identify areas of strength
span about twelve and a half years, with some customers as well as improvement.
having been with us for as long as 35 years.
ICI Pakistan Limited Annual Report 2016 -17 111

Technical Directors of one of Polyester Business’s largest The Takemoto spin finish team, one of the Polyester
customers, the Monnoo Group, visited the Polyester plant Business’s stakeholders, visited the Polyester plant in
in Sheikhupura and were given a tour of the facility. Sheikhupura.

Challenges consecutive marketing year, reducing excess global stocks in


The regional PSF industry remains under pressure as 2017-18. Global cotton prices are expected to continue being
the addition of increased production capacities in China driven by production levels in key cotton growing areas, and
further aggravates issues in this oversupplied industry. The by tightening stocks in China.
continuing oversupply results in increased competition from
Chinese exporters who engage in illegal dumping as they On the other hand, the domestic cotton market will be
seek export outlets to liquidate their inventories. impacted by the extent and timing of monsoon rains
across Pakistan. In the domestic downstream industry, the
On the domestic front, we continue to experience a variety implementation of the Prime Minister’s export package for
of factors – including the high costs of doing business – that the textile sector will prove to be a key driver for improving
pressure margins and compel the textile industry to operate demand, however, the full extent of its implementation is yet to
well below potential. Coupled with the persisting state of be observed. Another key factor affecting the performance of
oversupply, sluggish downstream demand, and the challenge the domestic PSF industry will be the Government’s provision
of dumped imports from sources other than China, this will of necessary tariff protections to the domestic PSF industry.
necessitate tremendous effort on our part in order to retain At the Polyester Business, we continue working towards
market share. this goal in the hope that the required tariff protection for the
domestic PSF industry will be realised.

Future Outlook Despite the numerous challenges posed by the global and
The current oversupply in global PSF markets is likely to domestic scenario, at the Polyester Business we remain
persist going forward. The trajectory of feedstock prices will intent on leveraging our strengths in the face of all possible
be determined by crude oil price trends, and by the market future challenges, and capitalising on growth prospects
fundamentals of PSF raw materials, i.e., PTA and MEG. Cotton in the textile industry with both conventional and new
consumption is forecast to exceed production for the third product variants.
112 ICI Pakistan Limited Annual Report 2016 -17

Sustainability Performance

Sustaining
Innovation for
Tomorrow
Innovators keep their sights set on the future. This means
that while changing the game today, we also keep an eye
on the impact of our changing practices for tomorrow. It
means making sure our operations are not just smart, but
sustainable in the long run. That’s how we ensure our drive
to innovate will stand the test of time – and always be a
positive catalyst for change.

This section contains a comprehensive report on our sustainability strategy,


KPIs, annual and long-term targets and performance.
ICI Pakistan Limited Annual Report 2016 -17 113
114 ICI Pakistan Limited Annual Report 2016 -17
ICI Pakistan Limited Annual Report 2016 -17 115

Table of
Contents
Message from the Chief Executive 116
Sustainability Performance 2016-17 at a Glance 117
Sustainability Strategy and Sustainability Council 118
About the Report 120
Materiality Assessment 121
Stakeholder Engagement 123
Economic Performance: Management Approach 127
Integrity Management: KPIs and Overview 2016-17 128
Sourcing: KPIs and Overview 2016-17 129

Environmental Performance Management Approach 130


Environmental Performance Management (EPM) Database (Sustainability Highlight) 131
Energy: KPIs and Overview 2016-17 132
Off-Grid Solar Power for Lillah Salt Mine (Sustainability Highlight) 133
Water: KPIs and Overview 2016-17 134
Conserving Resources at the Polyester Business (Sustainability Highlight) 135
Emissions: KPIs and Overview 2016-17 136
Effluents and Waste: KPIs and Overview 2016-17 137

Social Performance Management Approach 138


HSE&S Champions Project, Life Sciences Business (Sustainability Highlight) 140
Occupational Health and Safety: KPIs and Overview 2016-17 142
Training and Education: KPIs and Overview 2016-17 143
Diversity and Equal Opportunity: KPIs and Overview 2016-17 144
Non-Discrimination: KPIs and Overview 2016-17 145
Providing Accessible Healthcare (Sustainability Highlight) 146
Local Communities: KPIs and Overview 2016-17 147

GRI Content Index 148


External Assurance 158
116 ICI Pakistan Limited Annual Report 2016 -17

Message from the


Chief Executive
Dear stakeholder, operations. Our resultant increased energy consumption
was reflected in higher per ton energy usage in 2016-17 as
Welcome to the ninth annual Sustainability Report for ICI compared to last year. Water consumption for 2016-17 also
Pakistan Limited, presented as part of the Company’s Annual increased in comparison to last year, due to major expansion
Report 2016-17. This year, we have attempted to report on projects undertaken at our Soda Ash site. However, this was
our sustainability efforts in line with the newly introduced GRI compensated for to some extent by the fresh water usage
Standards, and I am pleased to share that we are one of the reduction initiatives taken by all our manufacturing sites.
first companies in Pakistan to adopt these new reporting
standards. The fact that we continue to voluntarily report A particularly successful case of water reuse and
on sustainability, and endeavour to improve our reporting conservation was seen at our Polyester site, where ten
standards and report quality year on year, is a testament to million litres of water were recycled during the year from our
the importance placed on sustainability practices and their wastewater treatment facility; this translated into fresh water
timely, transparent disclosure at ICI Pakistan Limited. savings sufficient to serve the drinking needs of ten thousand
people for the whole year. So, as you will see, consistent
As a manufacturing concern, we are well aware of our efforts are being made to offset impacts where they occur.
impacts on the economy, environment and society. We
continue to work to manage and offset these impacts as Today, ICI Pakistan Limited is growing; we have capacity
much as reasonably possible, alongside ensuring the growth expansions underway, as well as the integration of acquired
of the business and value creation for our stakeholders. This manufacturing facilities and other projects in the pipeline.
is an important part of our brand promise, Cultivating Growth, Regardless of our growth and subsequent increase in our
which as I often reiterate, is a promise that extends to all energy needs and environmental outputs, we ensure that
aspects of the Company’s operations. we manage these impacts in line with regulatory compliance
requirements such as the National Environmental Quality
As we have reported on sustainability parameters for almost a Standards (NEQS). We also encourage our teams to
decade now, we have a clear understanding of the topics and key continually think of new and innovative methods to minimise
areas that are of highest priority to the Company. Nevertheless, impacts and maximise the effectiveness of our processes.
adopting the GRI Standards gave us the opportunity to revisit and
rethink some of the parameters we report on. Broadly speaking, At ICI Pakistan Limited we have a multi-functional
I can tell you that health, safety and security continues to be a Sustainability Council that is tasked with reviewing annual
prime area of focus for us, as well as our various environmental sustainability performance and setting voluntary targets for
impacts (including emissions, water management and waste future performance. These targets are set based on data
reduction), and investment in our people. gathered by our Environmental Performance Management
(EPM) database which collates and analyses data on relevant
This report is about transparency, and about sharing sustainability parameters. In this report, we present a new
information with our stakeholders so that they can better range of five-year targets (for 2021). These targets will now
understand and assess our operations. During 2016-17, we guide our sustainability performance for the coming years.
did have a few regrettable incidents with regard to safety. You However, it is important to be realistic and to adapt to
will find details in the report, but rest assured the outcome changing circumstances as needed; with the aforementioned
of these incidents was a re-evaluation and tightening of our upcoming expansions, acquisitions and new projects, these
HSE&S protocols and procedures. Investigations were carried targets may require subsequent review and revision.
out for the incidents that occurred, remedial action was taken
accordingly, and we have worked to make sure our people at Going forward, energy management and responsible use of
all levels learn a valuable lesson from such incidents so that resources will continue to be a key priority for us, as will ongoing
we are all more vigilant and better equipped in the future. The health, safety and security, along with the creation of greater
Company remains focussed on assessing the effectiveness economic and social value. These priorities are a vital part of
of existing regulatory HSE&S frameworks and approaches Cultivating Growth for us at ICI Pakistan Limited, as we strive to
on an ongoing basis. In 2016-17, one of our main focus areas make more responsible, sustainable choices in our business.
was employee training on various facets of HSE&S, including
upgradation of existing procedures and protocols. Best regards,

With regard to energy, we have seen an increase in


consumption that was driven by a necessary change in our
fuel mix. The persisting fuel crisis in the country, particularly Asif Jooma,
with regard to liquefied natural gas (LNG) availability, Chief Executive,
necessitated that we turn to other fuel sources to power our ICI Pakistan Limited
HSE&S Training
ICI Pakistan Limited Annual Report 2016 -17 117
Calendar

EPM GRI

Sustainability
Database Standards Injuries

Performance Chief Executive’s


HSE&S Award

2016-17 The existing Learning


Events database was

at a Glance
utilised to identify top
HSE&S Training Occupational HSE&S
risks to the User The
Company.
Calendar Illness Manual
Compliance Chief Executive’s Best
EPM GRI
Database Standards HSE&S Initiative Award was Injuries
relaunched to recognise the
best solutions to mitigate
these risks.
EPM GRI
Database Standards Injuries

Chief Executive’s
EPM GRI Crisis
EPM HSE&S Award HSE&S Training GRI Coal & Furnace Occupational HSE&S Us
Database Database Standards
Standards Oil Usage Illness InjuriesManagementInjuries
Plan
Manual
Calendar
Compliance

Successful relaunch of the ICI Pakistan Limited 2016- Due to compliance with In light of the current
Environmental Performance 17 Sustainability Report the Company’s Heath security
HSE&S Usersituation, the ICI
HSE&S Training Occupational
CalendarManagement (EPM) prepared in Illness
accordance Assessment and Work Pakistan Limited Crisis
Manual
Database, anEPMapplication for GRI Compliance
with the newly issued GRI Environmental monitoring
GRI Management Plan was
Database Standards Injuries Injuries
the collation and analysis Standards
of Standards programmes, no updated and reissued.
the Company’s HSE&S data. occupational illness was
reported.

HSE&S Training Occupational HSE&S User HSE&S User


HSE&S Training Occupational Manual
Calendar Illness Illness Manual
Calendar Compliance
Chief Executive’s Compliance Crisis
HSE&S Award Coal & Furnace Management
Oil Usage

Chief Executive’s EPM GRI


HSE&S User Crisis Injuries
HSE&S User
HSE&S Training Occupational Occupational
ing HSE&S Award Database Coal & FurnaceStandards
Manual Management Plan Manual
Calendar Illness Oil Usage Illness
Compliance Compliance

HSE&S Training Calendar The use of coal and furnace The Company’s HSE&S There were four reportable
2016-17 was developed oil increased due to the reporting manual (HSE-003 injuries to employees and
and fully implemented, the prevailing energy situation, Arrangement for Reporting supervised contractors, and
highlight of which was the negatively impacting HSE Performance) was one reportable injury to an
Chief Executive’s Chief Executive’s Crisis Crisis
HazardHSE&S
Study Award
Leadership gaseous emissions and total Coal & reviewed and aligned with
Furnace independent contractor. Plan
Management
HSE&S Award Coal & Furnace Management Plan
Course. 4,130 man-days for energy perOilton production. Oil Usage
Usage the latest international Investigations were carried
training were successfully standards on reporting. out for all incidents and
completed. Through this system, recommendation plans
immediate reporting to all implementedHSE&Saccordingly.
User
HSE&S Training Occupational
Calendar Illness stakeholders is ensured. Manual
Compliance
ve’s Chief Executive’s Crisis Crisis
ard HSE&S Award Coal & Furnace Coal & FurnaceManagement Plan Management Plan
Oil Usage Oil Usage
118 ICI Pakistan Limited Annual Report 2016 -17

Sustainability Strategy and


Sustainability Council
At ICI Pakistan Limited, we manage sustainability in line with a laid-out
sustainability strategy and with the help of a Sustainability Council, which
acts as a governing body on matters relating to sustainability targets and
performance.

Sustainability Strategy our stakeholders have a right to information; transparency in


Our sustainability strategy is simple and compelling. It is this regard promotes and increases trust.
divided into the following underlying principles, which we aim
to uphold and adhere to:
Sustainability Council
1. Fostering a Culture of Excellence Established in FY 2013-14, the Sustainability Council is
We aim to build an environment in which people constantly a multi-disciplinary team comprising members from all
strive to deliver more, and we endeavour to achieve this Business and functional areas of the Company. The Council
through attracting and retaining the best talent. This was established to foster the ongoing sustainable growth of
mindset encompasses sustainability-related practices and ICI Pakistan Limited.
performance.
The Council’s objective is, therefore, to assist the Board in
2. Operating Responsibly fulfilling its oversight responsibility to shareholders with regard
We strive to operate with due respect and consideration for to the Company’s sustainability practices. The Council’s
our environment, communities and other stakeholder groups. scope includes development, implementation and monitoring
We endeavour to create and put into practice processes of the Company’s Health, Safety, Environment and Security
which evolve with changing needs, while ensuring that we (HSE&S) policies and practices.
operate responsibly.

3. Environmental Stewardship Responsibilities of the Council


We want to be the leaders in innovation and developing • Define sustainability KPIs, measurement matrices, and
solutions for cleaner, greener systems to reduce our impact establish sustainability targets.
on the environment. • Review partnerships and relationships, both current and
proposed, with stakeholders, i.e., customers, regulators,
4. Creating Socioeconomic Value communities, shareholders and suppliers.
We work to create value in our local communities by providing • Formulate and execute communication strategies relating
the tools and assistance required for capacity building, and to the Company’s sustainable growth.
improving quality of life. • Introduce new and innovative technologies that will
further the goal of sustainability within the Company, and
5. Transparency implement actions to protect such technologies.
We ensure that all processes and operations at our
Businesses and Functions are transparent. We believe that
ICI Pakistan Limited Annual Report 2016 -17 119

Structure and Operation of the Sustainability Process at ICI Pakistan Limited

Board of Directors

HSE Managers
HSE&S Management Quarterly Meeting
Committee Forum
(CE + Business/ (Site / Location
Function Heads) HSE Managers)

Sustainability Council
(Verification / Follow-up / Monitoring)

Corporate HSE Business / Location


HSE&S Committees

Verification Tracking / Follow-up Monitoring


Environment Performance
Management (EPM) Corporate
HSE&S Improvement
Database Quarterly Initiatives
Implementation
Reporting Monitoring

Businesses / Locations

In accordance with the requirements of the ICI Pakistan sustainability KPI, and benchmarks performance against
Limited HSE&S Management System, all Businesses and the baseline. These trends are then presented to the
functional locations are required to monitor and report Sustainability Council for review. After discussion, the Council
parameters that directly affect the Company’s Operational agrees on a suitable mechanism for the control of the KPIs
Eco Efficiency (OEE) footprint. Besides this, all Businesses based on global sustainability guidelines. The Council
are also required to report their health and safety also briefs the Company’s Executive Management Team
performance. The reporting is governed through a state-of- (EMT) regarding the OEE footprint, potential technological
the-art application called the Environmental Performance requirements and the financial impacts these may have on the
Management (EPM) database (more details on the EPM can Company and its communities.
be found on page 131).
This reporting cycle culminates with realistic targets and
The Corporate Health, Safety, and Environment (HSE) plans being set for individual KPIs, covering the current
department functions as an independent authority within year as well as the next five years. Quarterly meetings are
the organisation and is the custodian of the EPM database. held to ensure that all KPIs remain on track to achieve the
Corporate HSE analyses data to extract trends for each designated target.
120 ICI Pakistan Limited Annual Report 2016 -17

About the
Report
This is the ninth annual Sustainability Report of ICI Pakistan management system, and the Company’s Environmental
Limited, and has been prepared in accordance with the Performance Management (EPM) database, which is a tool
Global Reporting Initiative (GRI) Standards: Core option. for the collection and reporting of data on Health, Safety,
Voluntary sustainability reporting was initiated by ICI Pakistan Environment & Security (HSE&S) parameters.
Limited in 2008, and continues as a part of our commitment
to sustainable practices and transparency. Our internal reporting cycle takes place on a quarterly
basis and related information is gathered and input by
Report Boundary the respective Businesses and Functions for review by
The report covers the four core Businesses and corporate the Corporate Health, Safety and Environment (HSE)
Functions of the Company, including manufacturing sites, department. The Corporate HSE Manager is responsible for
corporate offices and regional/Business offices. The data data for ICI Pakistan Limited as a whole. Data pertaining to
in this report does not cover subsidiaries or associated integrity management, employment practices, sourcing and
companies of ICI Pakistan Limited. community investment is compiled and monitored by the
Sustainability Council members responsible for each area.
Employee data includes management and non-management Where limitations in collecting data exist, we have attempted
staff. Community investment is handled by the ICI Pakistan to include appropriate explanations in the report.
Foundation, which is a separate legal entity registered as
a trust. All monetary amounts in this report are given in Review & Assurance
Pakistani rupees (PKR), unless otherwise indicated. Independent review of this report was conducted by
A.F. Ferguson & Co. (a member of the PwC network), in
Reporting Period accordance with GRI Standards requirements, and they were
The reporting period corresponds with the Company’s engaged for this purpose by the Sustainability Council. A
financial year 2016-17 (from July 1, 2016, to June 30, 2017). statement from the independent external reviewer is included
The cycle of reporting is annual. at the end of this sustainability report, and outlines the scope
of the assurance exercise carried out. The GRI Standards are
Report Content a new, revised sustainability reporting framework that replace
This report provides information on topics that have been the GRI G4 Reporting Framework, and remain the most widely
assessed to be material to the Company, in accordance accepted global standard for sustainability reporting.
with GRI Standards requirements. The content of this report
has been developed keeping in consideration the GRI 101 Contact Us
Foundation Reporting Principles, which include principles that We encourage feedback on our Sustainability Report. If you
govern both, content and quality. would like to comment on the report or if you need more
information, please email us at: corporate.hse@ici.com.pk
Developed in accordance with the Company’s sustainability
strategy (outlined in this document), this report also presents You may also contact the following at ICI Pakistan Limited:
KPIs relating to these topics that have been set internally by the
Company’s sustainability reporting governing body, the multi- Muhammad Zafar Farid
disciplinary Sustainability Council. Key Performance Indicators Corporate Health, Safety and Environment (HSE) Manager
(KPIs) shared in this report were set during 2016-17, after the MuhammadZafar.Farid@ici.com.pk
2015-16 report covered the concluding year of the previous five
years’ targets. Syed Hamza Mohsin
Assistant Manager HSE
The five-year target for KPIs set in 2016-17 is the year Syed.Mohsin@ici.com.pk
2020-21; performance KPI targets to be achieved by that
date have been set accordingly. These will serve to guide us Hafsa Zubair
in our sustainability efforts going forward. However, given Manager Corporate Communications and Public Affairs
the Company’s growth and expansion, as well as a changing Hafsa.Zubair@ici.com.pk
economic and political landscape, these targets may be
subject to review and revision going forward.
A soft copy of this report and additional information on the
Data Collection Company, including our business units and products, is
Data has been obtained from our financial management available on our website at www.ici.com.pk
reporting systems, the corporate HR information
ICI Pakistan Limited Annual Report 2016 -17 121

Materiality
Assessment
At ICI Pakistan Limited, we focus our sustainability efforts Material topics for sustainability performance are identified
on those areas that potentially have significant impact on based on several factors, including stakeholders’ concerns
the most vital stakeholder groups, and which are deemed and feedback, alignment with the Company’s strategy,
to be of greatest significance and value to the Company’s objectives, vision, values and brand promise (Cultivating
continued growth, performance and success. This section Growth); the past practice of the Company; and internal
shares information on these critical or material topics and analysis, debate and discussion on issues raised by our
aims to explain how they have been chosen, and why they are multi-functional Sustainability Council. Material topics are
critical to our operations. also chosen based on general relevance and likely impact
in broader social, economic and environmental contexts,
such as the markets in which we operate, energy availability,
environmental issues and climate change.

List of Material Topics and their Boundaries

Area Material Topic Boundary

Economic Economic Performance ICI Pakistan Limited

Indirect Economic Impacts Local community

Market Presence ICI Pakistan Limited

Social Occupational Health and Safety ICI Pakistan Limited

Training and Education ICI Pakistan Limited

Diversity and Equal Opportunity ICI Pakistan Limited

Non-Discrimination ICI Pakistan Limited

Local Communities ICI Pakistan Limited, our local communities

Environmental Energy ICI Pakistan Limited, our customers

Water ICI Pakistan Limited, our local communities,


our customers

Emissions ICI Pakistan Limited, our suppliers,


our local communities

Effluents & Waste ICI Pakistan Limited, our suppliers,


our local communities
122 ICI Pakistan Limited Annual Report 2016 -17

Relevance of Material Topics to ICI Pakistan ICI Pakistan Limited is committed to encouraging greater
Limited diversity and ensuring equal opportunities for individuals
ECONOMIC based on merit (including qualifications and competency).
Economic Performance: Deemed to be material as This belief is driven by our core values (Passion for People;
disclosures under this topic relate directly to our Company’s Integrity and Responsibility) our brand promise Cultivating
value creation agenda as embodied by our vision, values, Growth, and our Code of Conduct.
and brand promise, Cultivating Growth. ICI Pakistan Limited
is committed to providing enduring growth and value for Non-discrimination: ICI Pakistan Limited is committed to
stakeholders, and this growth and value can be quantified ensuring fair and equal treatment of employees, free of bias.
and assessed accurately through the complete, audited This belief is driven by our core values (Passion for People;
financial statements of the Company, which are part of Integrity and Responsibility), our brand promise, Cultivating
this report. In addition, economic performance carries Growth, and our Code of Conduct.
implications for all other material topics reported upon.
Local communities: Disclosures on this topic take into
Indirect Economic Impacts: Disclosures under this topic account operations for the development of communities, and
illustrate our Company’s economic impacts on a wider socio- the impacts of these on local communities. These disclosures
economic front than if we were simply to take our customers are important because they provide an overview of the
and suppliers into consideration. Our intent to support growth significance of these operations and their impacts, allowing
and development is not limited to the Company. Additionally, stakeholders to assess the value added by such initiatives.
we consider ourselves responsible corporate citizens,
therefore it is important we monitor and measure our ongoing ENVIRONMENTAL
indirect economic impacts in the wider context. Emissions: Emissions control relates directly to climate
change and the impact of gaseous emissions on the ozone
Market Presence: Our Company’s presence in the market layer. As a manufacturing concern, this is of vital importance.
has significant impacts in terms of employment opportunities Disclosures in this regard also provide an overview of the
provided, number and level of professionals employed, regional Company’s compliance to national and governmental
employment prospects, and compensation and benefits regulations, such as National Environmental Quality
provided. Information in this regard is therefore highly relevant to Standards (NEQS).
the Company’s operations and its value creation agenda.
Water: This is deemed a material topic based on not only
SOCIAL the water usage requirements of the Company’s operations,
Occupational Health and Safety: This topic carries but also the current state of water availability in the country.
tremendous significance in relation to ICI Pakistan Limited as According to Development Advocate Pakistan, Volume 3,
health and safety are a primary concern and an overarching Issue 4 (a UNDP report dated February 2017) water scarcity
responsibility of the Company under its values (Passion for continues to become an increasingly critical issue in Pakistan.
People; Integrity and Responsibility) and its HSE&S policy. The report emphasises that “Pakistan extracts 74.3 percent of
The topic affects not only direct employees of the Company, its freshwater annually, thereby exerting tremendous pressure
but also contractors, suppliers and members of our on renewable water resources.”
communities.
Effluents and waste: As a manufacturing concern, this is
Training and Education: At ICI Pakistan Limited, we have an important topic as it has an impact not only on our own
the long-standing ambition to be an employer of choice and operations, but also on local communities where waste is
to be known as a “Talent factory”, recruiting and retaining generated and disposed of. Management and minimisation of
the best and the brightest. The training, education and waste materials is also important with respect to biodiversity
development of our people is therefore a topic of critical of the relevant areas.
importance to us. We work towards this goal on a continual,
ongoing basis, with formal training, development and growth Energy: Due to the national energy crisis, this topic is highly
opportunities, effective, timely, performance appraisal and relevant and therefore deemed material. The economic
feedback systems, and by creating an open culture that impact of energy usage on products and services provided
encourages feedback and discussion. is significant, as energy costs directly impact the cost of
products. More efficient energy usage is therefore not only vital
Diversity and Equal Opportunity: As part of our HR in terms of the environment, but also because it can provide
ambition, we strive to be an equal opportunity employer. the Company a competitive edge in terms of cost factors.
ICI Pakistan Limited Annual Report 2016 -17 123

Stakeholder
Engagement
At ICI Pakistan Limited, our approach to engaging with our stakeholders is
underpinned by our core values of Customer Centricity and Passion for People,
along with our vision to be a partner of choice. It is also encompassed by our
promise of Cultivating Growth, which aims to ensure we encourage growth
and development, and add value, wherever we engage with groups that are
impacted by our operations.

A stakeholder of the Company is defined as an individual or Customer engagement is monitored at the level of each
group associated with, linked to, or significantly impacted by Business by surveys conducted and/or feedback collected
the operations of ICI Pakistan Limited. through various channels. Community engagement is
maintained and monitored by CSR teams in each Business,
Our core groups of stakeholders are identified by our Business and through effective coordination with labour unions at
and functional teams, based on the nature and scope of our our plant and manufacturing sites. Employee engagement
operations. These are endorsed by the Executive Management is driven across the Company at a corporate level. Chief
Team (EMT) and the Sustainability Council as significant groups Executive’s sessions are conducted Companywide as a
to engage with, and engagement objectives and strategies are platform for employees to address concerns, giving the
formulated and carried out accordingly. An important aspect of Chief Executive a chance to share information and answer
stakeholder group selection is communication and feedback questions. The Company’s annual employee engagement
with these groups; this is done via a number of methods, both survey, as well as performance appraisal and management
formal and informal. systems serve as vital channels for feedback and monitoring
of progress against set engagement targets. In each area
of stakeholder engagement, concerns and suggestions are
registered and actions are outlined accordingly.
124 ICI Pakistan Limited Annual Report 2016 -17

Stakeholder Engagement Mode of Topics identified by Our response


group frequency consultation stakeholders

Shareholders/ Regular Corporate Finance, Ongoing economic Commitment to ongoing


Investors Company Secretary, viability, growth prospects, growth and value creation;
Corporate petrochemical market continuing transparency of
Communications and situation, new projects and financial and other information;
Public Affairs Department, expansions timely public disclosures;
analyst briefings, meetings clarifications if any required

Employees Regular CE Sessions, internal Training and education; Increased HR process


events, annual career development; transparency; Focus on
engagement survey, capacity building trainings,
discussions, internal cross-Functional and cross-
communications Business movement

Customers Regular Technical support Cost, quality and product Customer capacity building,
services, surveys, field availability expanding/increasing product
visits, advisory services offerings, efficiencies in supply
chain

Suppliers Regular Code of conduct Favourable terms and Suppliers are given ample
compliance, surveys, visits conditions opportunity for discussion
and negotiation. ICI Pakistan
Limited strives to provide fair
and market compatible rates

Local Regular Via manufacturing site Manufacturing sites’ Managing environmental


Community employees, CSR teams impact; employment impacts through sustainability
prospects initiatives; creating provisions
for local employment

Government and Regular/Case Relevant Business or Compliance with Understanding and ensuring
other regulatory Basis functional representatives, regulations and laws all legal and regulatory
bodies meetings with officials, requirements are complied
submissions of data for with.
review and compliance
Lobbying with the government.
to address matters impacting
business.

Media Occasional Press releases, one-on- Information on the Press and media releases
one media engagement operations of the on relevant subjects, Chief
Company, growth Executive’s statements/
prospects and interviews, responsiveness to
sustainability practices, media queries
economic contribution
ICI Pakistan Limited Annual Report 2016 -17 125

of a challenging business environment. Another new customer


Major initiatives carried out during the engagement initiative pioneered by the Polyester technical team
year for Stakeholder Groups was the two-day Technical Customer Conference organised
in Lahore, which brought the technical directors of textile
Shareholders/Investors mills together with Polyester Business teams for the first time,
AGMs and EoGMs were carried out as required to inform encouraging frank and open dialogue on important issues. The
and obtain consent of shareholders. Board members and initiative proved to be a great success, and the Business intends
senior management of the Company ware available at these on making this a regular occurrence. The Polyester Business
occasions to answer queries and address concerns of also conducted an independent customer feedback survey
shareholders, investors and analysts. An Investor Relations for the second year running. This not only allowed for better
Policy was approved by the Board and is now in place, which understanding of customer perception regarding our products
governs the timely, accurate and comprehensive release of and services, it also enabled a comparison of the past two years’
information for shareholders and investors. performance, helping us gauge our progress and identify areas of
strength as well as improvement.
Employees
To engage employees, ICI Pakistan Limited partnered with The Soda Ash Business carried out similar initiatives during
Gallup for the ‘iMPOWER employee engagement survey. the year, notably a distributor conference in Azerbaijan
Starting on the 35th percentile with a score of 3.87 (on Gallup’s in October 2016, and a customer conference in Australia
5 point rating scale) in 2015, the Company now stands at in March 2017. Both events proved successful and were
the impressive 68th percentile with a score of 4.30 in 2017. well-received by the target groups due to the concerted
This significant increase speaks volumes of the Company’s effort made by the Soda Ash teams to understand their
commitment and the collective belief of its people in this experiences, expectations and concerns.
important initiative, to achieve world-class engagement levels.
In the Life Sciences Business, each of the three Divisions of
The Company’s Leadership Development Roadmap the Business conducted their own tailored programmes to
continues to be a key ingredient in building the capabilities of engage and serve customers. The Pharmaceuticals Division
the Company’s employees. With a structured and integrated caters to a vast medical community including doctors and
talent development framework, which provides customised other healthcare professionals. During the year, the Division
training modules, executive coaching sessions and learning maintained its focus on engaging with customers to enhance
projects, more than 886 managers participated in this medical knowledge and product information. This was done
initiative in 2016-17. via participation in a series of informative symposiums,
conferences and roundtable discussions. A number of Health
Customers Care Professionals (HCPs) were also engaged in international
Customer Centricity is a core value at ICI Pakistan Limited, Continuing Medical Education (CME) programmes. Awareness
and this value is lived fully by the four Business units of the camps were also organised centring on relevant medical
Company with regard to their respective sets of customers. topics. The Division also provided supported to the medical
Each Business plans and executes customer engagement community by participating in notable medical conferences.
initiatives that serve the core needs of their respective Almost 200 HCPs were engaged via a campaign on Etipro. For
customer bases, and solicits feedback from them on various the first time, emphasis was also placed on engaging directly
topics, both in the form of formal surveys, and informal with trade partners for OTC brands.
meetings and gatherings. This feedback is evaluated internally
and then forms the basis for action planning to improve the In the Agri Division, sales and development staff regularly
customer experience going forward. trains farmers on the latest production technologies and on
more efficient farm management practices. The Agri Division
In 2016-17, at the Polyester Business, the sixth Polyester has reached 250,000 farmers across Pakistan. Retail partners
Business Customer Conference was held to strengthen play a pivotal role in the agriculture industry, ensuring the
customer relationships through feedback and discussion, and availability of product to farmers. The Division undertook
providing focussed support and solutions. The conference a series of business partner conferences to ensure close
garnered overwhelmingly positive feedback from customers who customer connect and improve partnerships through various
appreciated the team’s ongoing efforts especially in the face trainings/discussions.
126 ICI Pakistan Limited Annual Report 2016 -17

The Animal Health Division caters to a large rural population children are now treated at the clinic; previously these
of livestock and poultry farmers across the country. patients had to travel long distances to access adequate
The Division continued to work closely with farmers to healthcare facilities. Since the clinic’s inception in February
develop farming communities, empowering farmers with 2016, a total of 6,944 OPD cases have been catered to,
awareness and knowledge to help enhance productivity, and 346 pregnant women registered at the clinic, and 998
eventually, profitability. Topics covered in such engagement children under the age of five monitored for immunisation
activities include better farm management practices, breed and nutrition through the ‘Road to Health’ chart. Recently
development, biosecurity and nutrition. Among the customer an ultrasound machine has also been provided by the ICI
engagement initiatives taken by the Division in 2016-17 Pakistan Foundation to the clinic to aid in examination and
were technical sessions for customers and talks by foreign diagnosis of patients. A state of the art ambulance was
delegates invited to share their insight on current challenges also donated to the clinic at the time of inauguration to
in the livestock and poultry industries. The Division organised cater to emergencies in the local area.
the Third International Conference on Agriculture, Food and
Animal Sciences, as well as sponsoring the International Also based in Khewra, the Company’s most remote
Livestock Nutrition Summit, which brought together leading community, ICI Pakistan Limited’s long-running eye care
researchers to review and discuss emerging issues in the fields programme in collaboration with the Layton Rahmatullah
of agriculture, food and animal sciences, as these have the Benevolent Trust (LRBT) continues to operate sustainably,
potential to significantly impact industries, consumers, and the with monthly camps held for 25 years running. To date, 284
environment. Teams are also regularly trained on new product eye camps have been held, offering quality, free eye care
technologies, the latest farm management practices and key interventions through which 148,846 OPD consultations have
industry challenges, to help them serve customers better. been carried out, 16,513 surgeries completed and 28,757
refractions performed.
In the Specialty Chemicals Division of the Chemicals
Business, the following customer engagement initiatives were Government and other regulatory bodies
carried out. The Textiles and Water Treatment Chemicals During the year, we worked with government and regulatory
team participated in the GTex Textile exhibition in January bodies to provide our input, both directly and through relevant
2017 to promote ICI Pakistan Limited as a serious player platforms and forums, on draft legislations and regulations
in the segment and develop new and promising customer where required. Additionally, we make it a practice to
leads. The adhesives team held multiple carpenter meetings share information on industry-related matters which could
in Lahore and Faisabalad during the final quarter of the year. potentially impact the business and economic landscape of
A customer engagement survey covering more than 80 the country.
active customers across all four segments was conducted.
Their feedback was recorded on several processes including Media
product quality, sales process, sales staff behaviour, During the year, wherever possible, we complied with media
troubleshooting, information availability and overall customer requests to interview the Chief Executive of the Company with
engagement. The results of this survey will aid in developing regard to the Company’s operations, plans, future outlook
the customer engagement plan for the coming year. and economic prospects. Published in the mainstream media,
these interviews serve as further insight into the Company’s
Local community operations for not only the media, but also the general public.
Several projects were carried out to benefit local A clearly streamlined process is also in place regarding timely
communities, particularly in the areas of healthcare and prompt updates on the Company website regarding any
provision and education/vocational training. The disclosure of material information, such as financial results,
Hamqadam Community Clinic, a mother and child clinic acquisitions, expansions, or new partnerships and product
established in Khewra in 2016, in partnership with Marie launches. Channels of communication open to the media
Adelaide Leprosy Centre (MALC), completed its first full and the general public include email as well as social media
year of operations. Seventeen months into its running, the channels. The Company launched its social media presence
clinic has proved to be a valuable addition to Khewra’s in December 2016 in order to further make its operations and
healthcare infrastructure. Large numbers of women and initiatives accessible to the media and public.
ICI Pakistan Limited Annual Report 2016 -17 127

Economic Performance
Management Approach
Management approaches for the following material topics are covered in this
section: Economic Performance, Indirect Economic Impacts, Market Presence.
Other disclosures for these topics are presented in the GRI Content Index, and/
or in the Company’s Financial Statements 2016-17.
At ICI Pakistan Limited our performance is guided by our Net turnover in the Polyester Business grew by 7% on
vision, our values, and our brand promise, Cultivating Growth, account of higher prices across the petrochemical chain,
which underpins everything that we do. We recognise that our higher average Polyester Staple Fibre selling prices and
operations and activities have an economic impact at both, higher sales of Black Fibre, whereas Soda Ash revenues
local and national levels, and are committed to sustainable grew by 2% on account of higher volumes. The Life Sciences
growth and value creation for our stakeholders. Economic Business recorded a 28% growth in sales on the back of
performance is thereby a key driver of the Company’s new product launches, improved commercial execution, new
aspirations, goals, strategy and operations, and is proactively partnerships and business expansion, while the Chemicals
managed accordingly by all relevant stakeholders across the Business’s net turnover grew by 20% against the same period
organisational hierarchy. last year (SPLY) owing to higher sales volumes and a larger
customer base.
The overall responsibility of governing the organisation, along
with driving its economic performance, lies with the Board of Operating profit for the year at PKR 4,044 million is 16%
Directors. The Board is responsible for doing the following: higher than the SPLY, with improved performances in the
establishing Board policies; setting out strategies, goals, and Polyester, Life Sciences and Chemicals Businesses. This
objectives for the Company to operate in accordance with compensated for the Soda Ash Business’s marginally lower
and achieve; and formulating policies and guidelines that operating result compared to the SPLY, because of a higher
outline the way forward in achieving set goals and objectives. depreciation expense due to capitalisation of the 18MW
power plant. Growth in the Life Sciences and Chemicals
Goals and targets for economic performance are approved Businesses was mainly driven through expansion of the
based on proposals set forward by the Businesses, which are product range, customer engagement programmes, as well
duly approved by the Chief Executive and finally by the Board; as cost efficiencies achieved in the Chemicals Business.
the ultimate authority in this regard. Goals and targets may
be annual, or in the case of expansions, acquisitions and new Profit after tax (PAT) for the year ended June 30, 2017 at
business ventures, they may be targeted over a longer term. PKR 3,296 million is 16% higher than the SPLY due to higher
In approving business proposals or setting targets and goals operating profit, higher Dividend Income from NutriCo Pakistan
for economic performance, the Board considers a range of (Private) Limited and lower exchange losses as compared
variables and factors including business potential, market to the SPLY. Earnings per share (EPS) at PKR 35.69 is 16%
conditions, financial implications, the wider economic and higher, compared to PKR 30.78 for the SPLY. The Company
socio-political landscape, opportunities, threats and more. therefore continues to demonstrate its commitment to value
creation and sustainable growth. Comprehensive information
The Board is accountable to shareholders for the discharge on economic performance for the year can be found in the
of its fiduciary function, while the Company’s management is Business Performance section of the Annual Report 2016-17,
responsible for the implementation of the aforesaid strategies, as well as the Company’s financial statements.
goals and objectives in accordance with the policies and
guidelines laid down by the Board of Directors. The day-to- As part of our management of economic performance related
day management of the Company’s affairs is overseen by matters, at ICI Pakistan Limited we have in place systems
the Chief Executive (CE), whom the Board entrusts with the whereby stakeholders can ask questions, seek information
necessary powers and responsibilities for the execution of this and voice concerns. Annual General Meetings are conducted
role. The CE is in turn assisted by an Executive Management whereby shareholder queries and concerns are addressed
Team comprising the heads of Businesses and functions. by members of the Board, the Chief Executive and the
The Board is also assisted by a number of sub-committees Company Secretary. Shareholders are invited to AGMs and
comprising mainly of independent/non-executive directors. are encouraged to share their concerns and queries.

The Company’s economic performance for 2016-17 remained We have in place a voluntary, Board-approved investor
robust. Net turnover of PKR 41,364 million for the year under relations policy which ensures regular and timely
review is 12% above net sales for the previous year (2015-16), dissemination of economic and financial information
which was recorded at PKR 36,954 million. The sales revenue pertaining to the Company’s operations to investors, analysts,
growth is attributable to growth across all Businesses. shareholders and the general public.
128 ICI Pakistan Limited Annual Report 2016 -17

Integrity
Management
Key performance indicators

Integrity 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21


management Target

Code of Conduct number 20 5 NR 1 1 0 3 0


confirmed incidents

Code of Conduct % 100 100 100 100 100 100 100 100
acceptance employees

Management number 9 7 6 6 0 6 0 6
audits including
reassurance audits

Serious Incidents - number 1 1 0 0 0 0 1 0


Level 3

Serious Incidents - number 0 0 0 0 0 0 4 0


Level 1, 2

Serious loss of number 0 0 0 0 0 0 0 0


containment - Cat D

Regulatory action - number 0 0 0 0 0 0 0 0


Level 3

Overview 2016-17 The HSE&S Management Audit is held to verify the


To ensure all employees are well-versed with the Code, we Companywide implementation of, and compliance with,
include it in our induction training for new employees, as the ICI Pakistan Limited HSE&S Management System. The
well as organising regular training and refresher sessions decision to conduct this audit is based on the assessment of
at all levels. Upon joining the Company, new employees hazards, and the recommendations from the previous audit.
are required to sign a declaration of compliance to the In 2015-16, this audit was conducted in the fourth quarter of
Code of Conduct after they have read and understood the the year, hence it was not feasible to conduct a new audit
Code. before the completion of all audit recommendations.

This year, three Code of Conduct violation incidents were With regard to HSE&S performance, one Serious Incident (Level
recorded. These were dealt with in accordance with the 3), and four Serious Incidents (Level 1 and 2) were reported in
standard procedures and policies of ICI Pakistan Limited in 2016-17. For details, please refer to the Occupational Health and
this regard. Safety KPI overview section of this report.
ICI Pakistan Limited Annual Report 2016 -17 129

Sourcing
Key performance indicators

Sourcing 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21


Target

Vendor Policy signed % 85 92 92 88 94 87 91.3 96


by key suppliers

Vendor Policy signed % 28** 28 28 38 63 40 80.8 -


by Central NPR employees
Suppliers*

Supportive Supplier number 31 59 35 99 92 - 30 146


Visits

* Major public sector utility suppliers not included in this analysis.


** Monitoring started in 2011 by Polyester Business only.

The Company’s supply chain network includes the respective Estate which is a significant change from the previous year.
supply chain managers of each Business, along with their The ICI Pakistan Limited HSE&S Management System now
teams. The supply chain network aims to enhance the applies to the supply chain practices of Cirin, ensuring that
effectiveness of procurement practices and material handling best practices and standard procedures are implemented.
processes. This is done by actively seeking out and applying
best practices, and by capitalising on opportunities for
synergy between Businesses. Overview 2016-17
We aim to achieve 100% adherence to our vendor policy. In
We believe in the cradle to grave approach, ensuring 2016-17, the percentage of key suppliers who had signed our
our products are compliant with the ICI Pakistan Limited vendor policy increased by 4.3% as compared to the previous
HSE&S Management System at all stages of the life cycle. year. This is good progress, but leaves room for improvement.
With respect to supplier evaluation and selection, we have
stringent procedures in place to ensure that only high On the other hand, there was a significant increase in
quality raw materials are purchased through our local and 2016-17, over last year, in the percentage of vendor policies
international suppliers. signed for non-product related (NPR) suppliers. With the
growth and expansion of the Company, many new NPR
Through our four Businesses (Polyester, Soda Ash, Life supplier inductions were completed during the financial year,
Sciences and Chemicals) we deal in a vast portfolio of which resulted in the 40% increase shown in vendor policy
products, including light and dense soda ash, refined sodium signatories.
bicarbonate, polyester staple fibre, a wide range of general
and specialty chemicals, pharmaceuticals, nutraceuticals, Supportive supplier visits have been disclosed this year after
animal health products, and agricultural products. Our supply a hiatus. The Sustainability Council has planned to increase
chain operations are therefore fairly complex and cover many supplier engagement and development going forward, in
suppliers, across the country as well as internationally. order to align suppliers with the ICI Pakistan Limited HSE&S
Management System, which complies with international
With the acquisition of Cirin Pharmaceuticals (Private) Limited standards. We have set ourselves an ambitious target for
(Cirin), we have a manufacturing location in Hattar Industrial 2020-21 in this regard.
130 ICI Pakistan Limited Annual Report 2016 -17

Environmental Performance
Management Approach
Management approaches for the following material topics are covered in this
section: Emissions, Water, Effluents and Waste, Energy. Other disclosures for
these topics are presented in the GRI Content Index, or referenced therein if
occurring elsewhere in the Annual and Sustainability Report.
As a manufacturing concern, we at ICI Pakistan Limited Management of vital environmental performance parameters
recognise that our operations have a significant impact on is carried out in line with regulatory compliance requirements
the environment. Monitoring and evaluation of environmental such as NEQS and the Company’s belief in sustainable
performance comes under the domain of the Corporate development and growth in line with its vision and brand
Health, Safety and Environment (HSE) department. Our promise. Environmental performance is monitored and reported
enduring commitment to the highest standards of health and on regularly (on a quarterly basis internally, and annual basis
safety for our employees, customers and contractors, as well externally), through the use of the Company’s state-of-the-art
as to the protection of our environment, leads us to abide Environmental Performance Management (EPM) Database.
by a set of Health, Safety, Environment and Security (HSE&S) The EPM Database is a purpose-built application that enables
beliefs and principles. In line with these principles, we strive reporting on all HSE&S related parameters, and collates and
to constantly innovate and improve our HSE&S performance, analyses data against relevant sustainability parameters. This
which is the collective responsibility of every individual, data is then studied and utilised in various ways to aid in the
from the Executive Management Team right down to each setting of goals and targets for sustainability performance.
employee. Accordingly, we must all strive to apply the most
stringent HSE&S standards to our work. The Company’s multifunctional Sustainability Council is
tasked with reviewing annual performance and setting
We have in place an integrated HSE&S policy that governs voluntary targets for future performance. Targets are set
all HSE&S related matters, providing clear provisions for for five years, with our current target for the financial year
environmental performance management. The Corporate HSE 2020-21 being based on the actual performance achieved
Department is responsible for overseeing HSE&S as a whole in 2015-16. In line with our process, these were approved by
for the Company. Along with this, each of the Company’s Sustainability Council members. However, with upcoming
Businesses have their own individual HSE departments which expansions, acquisitions and other new projects, these
handle more Business-specific, localised environmental targets may require subsequent review and revision.
and other HSE&S-related matters. HSE&S is at the core of
everything we do, and every employee is responsible for With regard to grievance and reporting mechanisms, we have
complying with HSE&S policies and procedures, and is held a guideline titled “Information Notes for Managers: HSE 003
accountable accordingly. Arrangements for Reporting Health Safety Environment and
Safety performance to Corporate HSE.” This is a reporting
Our HSE&S Management System serves as a guideline for guideline for issues related to HSE, such as injury and
all ICI Pakistan Limited operations, including existing projects illness reporting, motor vehicle and distribution incidents,
and operations as well as new investments, and its scope occupational health performance reporting, environmental
extends to cover all Businesses and locations of the Company. reporting, product stewardship reporting and community
The HSE&S Management System is in compliance with involvement reporting. It contains the correct procedure
internationally recognised systems such as ISO 14001:2004 for reporting HSE&S violations, and is open to all internal
Environmental Management Systems Standard; OHSAS stakeholders. The ownership of this mechanism lies with the
18001:2007, Occupational Health and Safety Management Corporate HSE Department, and is intended for use by the
Systems; and the Responsible Care Management System. Strict HSE departments of individual Businesses. The reporting
compliance with HSE&S standards is a requirement at both the guidelines are revised regularly with the most recent revision
corporate and individual levels. The calculation of KPIs given being launched in June 2017.
in this report is based on the HSE&S Management System,
and the KPIs reported cover all four Businesses of ICI Pakistan The Company remains focused on assessing the effectiveness
Limited. Policies relating to HSE&S are approved by the Board of existing regulatory HSE&S frameworks and approaches on
of Directors, the ultimate governing body of the Company. The an ongoing basis. This helps us ensure that our systems are
currently applicable HSE&S policy was issued in December 2013. sufficiently robust to safeguard both, people and the environment.
ICI Pakistan Limited Annual Report 2016 -17 131

Sustainability Highlight

Environmental Performance
Management
(EPM) Database
Monitoring and reporting accurately on all relevant sustainability
reporting parameters is a vital part of sustainability performance and
management. At ICI Pakistan Limited, we have systems in place to help
ensure we collect information accurately and regularly, across the
Company, as this Sustainability Highlight illustrates.

During the year 2016-17, we relaunched our state-of-the-art Environmental


Performance Management (EPM) Database. The EPM Database is a purpose-built
application that enables reporting on all HSE&S related parameters.

Our continued focus on innovation means modernisation of existing procedures


and protocols is a big part of what we do; the EPM Database makes it simpler
for our Businesses to report their HSE&S data using three standardised monthly/
quarterly datasheets for Health & Safety, Environment and Energy.

While simple and user-friendly on the user interface side, the EPM is actually a
sophisticated tool on the back-end. Through it, our Corporate HSE Department
is able to consolidate and analyse the gathered data comprehensively, making
reporting data more effective. The EPM Database is sure to be an invaluable tool
going forward; we anticipate that it will support our benchmarking efforts as well
as give us an edge in terms of data gathering and availability that may enable us
to enter global competitions and highlight our sustainability initiatives on a wider
public platform.
132 ICI Pakistan Limited Annual Report 2016 -17

Energy
Key performance indicators

Energy Usage 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Total energy 1000Tj 4.3 4.3 2.1 4.9 5.7 6.5 8.2 7.4
consumption

Per ton production GJ/te 10.1 10.4 11.62 11.84 13.03 13.86 17.09 15.38

Overview 2016-17 within global standards, limestone is used to reduce


Over the years, the shortage of natural gas in Pakistan has emissions. However, the increased energy consumption
compelled the Company to turn to coal-based technologies in was reflected in higher per ton energy usage in 2016-17 as
order to generate steam and power. At ICI Pakistan Limited’s compared to the previous year.
manufacturing facilities for Polyester Staple Fibre and Soda
Ash, significant investments have been made in coal fired We have continued to invest in energy saving initiatives
boilers and steam turbines. Intrinsically, these power plants across our sites and locations. Optimum utilisation of
are energy intensive due to the use of coal, a relatively available natural gas, day-to-day process optimisation and
inefficient fuel in comparison with gas. In addition, the base strict monitoring of key energy parameters at manufacturing
parasitic loads of these plants are significantly higher than sites is in effect. Sustainability projects to meet energy
similar capacity units operating on natural gas. To counter the consumption targets are given high priority across the
effects of coal on the environment, and to maintain emissions Company.
ICI Pakistan Limited Annual Report 2016 -17 133

Sustainability Highlight

Off-Grid Solar Power for


Lillah Salt Mine Offices and
Staff Residences
Our approach to sustainability at ICI Pakistan Limited encourages
innovative thinking. This Sustainability Highlight is an example of
exactly that; a solution that met the needs of the Company’s operations
while also taking into account environmental impact and resource
conservation.

ICI Pakistan Limited acquired the rights to the Lillah salt mines in the recent
past. Located in the remote village of Lillah, some 30 kilometres from Khewra,
the area had no access to WAPDA or any other source of electricity. Prior to the
commissioning of our road header salt mining project at the mines in August
2016, the offices and staff residences situated at the mines also subsequently had
no access to electricity.

After significant research, the Roadheader E&I Commissioning team decided to


make use of solar power to generate the electricity needed for operations at the
site. The team designed, selected, and installed a complete, off-grid solar power
system to provide power to the roadheader crew and mine staff. The system has
an overall capacity of 6.5 kilowatts, and comprises of a total of thirty-six 150 watt
mono-crystalline solar panels, along with eighteen sealed VRLA 165 amp-hour
batteries. The camp now not only has a twenty-four hour supply of electricity, but
as an added advantage, it is powered by a renewable source.
134 ICI Pakistan Limited Annual Report 2016 -17

Water
Key performance indicators

Water Usage 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Total fresh water use million m3 4.12 3.48 1.57 3.49 3.73 4.22 4.83 4.35

Per ton production kg/te 9.7 8.53 8.7 8.44 8.47 8.91 10.01 8.9

% of sites with % 25 25 33 33 33 33 33 100


sustainable fresh
water

Overview 2016-17 installed to reuse water from the site’s effluent treatment plant,
Water consumption for 2016-17 increased due to major for horticultural use on-site. These sprinklers utilise 10 million
expansion projects undertaken at our Soda Ash site. This litres of water annually from the wastewater treatment facility,
was compensated for, to some extent, by the fresh water which in return enables us to save enough fresh water to serve
usage reduction initiatives taken by all our manufacturing the drinking needs of 10,000 people for the whole year.
sites.
Additionally, the Chemicals Business recycles and reuses 10%
Significant amongst these initiatives was one taken by the of the total water supply used in the Business’s manufacturing
Polyester Business, where 14 new water sprinklers were processes, also through an effluent treatment plant.
ICI Pakistan Limited Annual Report 2016 -17 135

Sustainability Highlight

Conserving Resources at the


Polyester Business
Steam is an important part of the manufacturing This year, our Polyester Business initiated the Condensate
process of Polyester Staple Fibre. Accordingly, the Recovery Improvement Project, installing a flow transistor
efficient utilisation of steam is also a vital requirement. as part of the manufacturing process, to provide better
This Sustainability Highlight explains an initiative monitoring of condensate. Through this system, we were able
implemented by the Polyester Business to improve to track exactly how much condensate we are recovering.
the utilisation of steam in the manufacturing process, In addition, trends emerging from the gathered data helped
saving energy and water. us learn if there was any loss of condensate. Through
monitoring, we have been able to record and capture
After heat dissipates from steam, it converts back into multiple instances of condensate loss which would otherwise
liquid form; this left-over liquid is known as condensate. have gone unnoticed. Through this initiative, the Polyester
Condensate is a useful resource, as it can be reused to make Business has succeeded in saving not only 1.4 million litres
more steam, thereby enabling us to use less energy and fresh of water, but also 400 GJ of energy. This energy saving is
water in the production of steam. Condensate is important equivalent to a reduction of 27 tons in our CO2 footprint,
for two reasons; firstly it is already treated and purified in line while the saving of 1.4 million litres of water translates into
with the requirements of the process, and secondly, while enough water saved to fulfill the drinking needs of 1,500
it has cooled to quite an extent, it still contains a significant people for an entire year.
amount of energy, which would otherwise go to waste if the
condensate were not reused.
136 ICI Pakistan Limited Annual Report 2016 -17

Emissions
Key performance indicators

Emissions Control 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Total COD emissions te 53.78 39.52 17.82 16.43 18.05 15.99 20.04 16

Per ton production kg/te 0.13 0.1 0.1 0.04 0.04 0.03 0.04 0.03

Total VOC emissions te 72.34 57.12 1.33 3.23 3.45 3.56 3.52 3.2

Per ton production kg/te 0.17 0.14 0.01 0.01 0.01 0.01 0.007 0.007

Total NOx emissions te 422.93 420.28 206.06 798.34 1209.18 1611 2387.27 2150

Per ton production kg/te 0.99 1.03 1.14 1.93 2.75 3.4 4.95 4.4

Total SOx emissions te 2672.9 2590.15 1402.4 4338.97 3091.74 3562.32 4251.98 3827

Per ton production kg/te 6.29 6.35 7.75 10.5 7.02 7.53 8.82 7.91

Total Direct CO2 million te 0.35 0.35 0.13 0.43 0.52 0.62 0.89 0.8
emissions (Scope 1)

Per ton production kg/te 829.5 847.95 737.5 1038.11 1196.13 1318.7 1854.07 1670

Total indirect CO2 te 5642 3235.61 706.86 2413.32 2384.2 1501.56 1275.63 1123
emissions (Scope 2)

Per ton production kg/te 13.33 7.93 3.91 5.84 5.42 3.17 2.64 2.4

Overview 2016-17 A notable initiative was undertaken by the Polyester Business


During 2016-17, Operational Eco Efficiency KPI’s on gaseous to prevent heat loss across the manufacturing site. This
emissions have been affected by the use of coal as a fuel involved identifying surface temperatures of various systems
source. In comparison to last year, the Chemical Oxygen including critical manufacturing equipment and pipelines, by
Demand (COD) level is higher in 2016-17, due to operation carrying out a thermographic camera audit which enabled
of our steam ejector-powered batch plant at the Polyester the identification of weak insulation points. Action was then
Business (the batch plant is a production line which was taken to reinsulate these areas, resulting in a saving of 2.3 TJ
previously not in use). of energy, which translates into a reduction of 150 tons in our
CO2 footprint.
ICI Pakistan Limited Annual Report 2016 -17 137

Effluents
and Waste
Key performance indicators

Waste Management 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Total waste kte 2.73 2.28 0.43 12.88 22.2 28.94 8.86 8

Per ton production kg/te 6.44 5.6 2.35 31.18 50.44 61.13 18.38 16.4

Total hazardous kte 0.52 0.53 0.001 0.0076 0.24 0.006 0 0


waste

Per ton production kg/te 1.22 1.3 0.003 0.001 0.001 0.013 0 0

Total non-reusable kte 0.384 0.385 0.001 0.0076 0.24 4.03 4.11 3.8
waste

Per ton production kg/te 0.9 0.94 0 0.001 0.001 8.76 8.53 8

Total non-reusable kte 0.327 0.323 0.001 0.008 0.24 0.006 0 0


hazardous waste

Per ton production kg/te 0.77 0.79 0 0 0.001 0.013 0 0

Total hazardous kte 0 0 0 0 0 0 0 0


waste to landfill

Per ton production kg/te 0 0 0 0 0 0 0 0

Overview 2016-17
Waste at the Soda Ash plant has been reduced significantly Due to economic reasons, the coal fired boiler (CFB) plant
after an initiative was put in place to reuse the by-products at the Polyester Business remained out of operation, thus a
of the coal combustion process; fly ash and slag waste. signification reduction in total waste was observed.
138 ICI Pakistan Limited Annual Report 2016 -17

Social Performance
Management Approach
Management approaches for the following material topics are covered in this
section: Local Communities, Occupational Health and Safety, Diversity and Equal
Opportunity, Non-discrimination, Training and Education. Other disclosures for
these topics are presented in the GRI Content Index, or referenced therein if
occurring elsewhere in the Annual and Sustainability Report.

ICI Pakistan Limited is focussed on ensuring that our internationally recognised systems such as ISO 14001:2004
impact on society is positive and geared towards growth Environmental Management Systems Standard; OHSAS
and development. Society in this context covers a broad 18001:2007, Occupational Health and Safety Management
range of people, but most significantly, the following Systems; and Responsible Care Management System. It
identified stakeholder groups: our own employees and local serves as a guideline for all operations and investments
communities. as well as existing projects and operations, and covers all
Businesses and locations of the Company. Strict compliance
As an employer of over 1,300 people across Pakistan, we with HSE&S standards is required at both, Company and
have a significant impact on the livelihoods, opportunities individual level. The calculation of KPIs given in this report is
and growth prospects of the people who work with us. As based on the HSE&S Management System. More detailed
such, it is important for us to monitor and share information information on the functioning of the HSE department,
on these aspects. As a corporate entity that operates within including priorities, functioning and management of data and
the context of a wider community, we are aware of our effects targets, is included in both; the Environmental Performance
on, and responsibilities to, the populations of communities Management Approach as well as the Sustainability Strategy
that are situated near, or are otherwise affected by, our and Sustainability Council section of this report (Page 118).
operations. These include people from local communities that
are geographically close to our major manufacturing sites, for Community investment and CSR at the Company is managed
example. primarily by the Corporate Communications and Public Affairs
Department, under the guidance and approval of the Board
Material topics relevant to the Company’s social operations of Trustees of the ICI Pakistan Foundation. Additionally,
have been identified based on ongoing practice, on the basis multifunctional CSR teams situated within Businesses or at
of stakeholder consultation, influence of social impacts on our locations also carry out and manage CSR projects. The
stakeholder decisions, severity of impacts and business ICI Pakistan Foundation is a trust registered under the Trusts
strategy. Social performance at the Company is the joint Act 1882. All CSR initiatives undertaken by the Company,
responsibility of three stakeholders, each responsible for their as well as all related major investments, are approved by the
own specified area; HSE&S, Corporate Social Responsibility, Board of Trustees, and monitored regularly. The Board of
and Human Resources. Trustees is empowered to approve commitments to support
social investment initiatives; and manage, utilise and invest
The Company has well defined policies and procedures that the assets of the Foundation. The Company makes an
govern health and safety, human resources, and community annual contribution of its profit after tax for the year to the
investment. The HSE&S Management system governs Foundation, with the approval of the Board of Directors of ICI
HSE&S performance within the Company, and complies with Pakistan Limited.
ICI Pakistan Limited Annual Report 2016 -17 139

Guided by our CSR Policy, which was approved by the Board sustainable business growth. Great emphasis is placed on
of Directors in January 2017, the Foundation’s initiatives adhering to, and living by, the Company values (Customer
(under the umbrella of the Hamqadam Programme) focus Centricity, Integrity & Responsibility, Innovation, Passion for
primarily on the following broad areas: education, health, People and Delivering Enduring Results) in all dealings, both
community and environment. Through the Foundation, internal and external. All individuals are also expected to act
we also support civic development through investment in in accordance with the Code of Conduct; there is a zero
community projects, disaster relief and rehabilitation activities tolerance policy in terms of any acts or practices which are
as needed. in conflict with both, the values and the Code of Conduct.
A robust whistleblowing process known as the Speak
The Human Resources Department operates in accordance Up programme, is in place which provides a reliable and
with the ICI Pakistan Limited Human Resource Policy, a independent framework to highlight and raise any violations to
comprehensive, Board-approved document which covers our values and Code of Conduct.
the principles and guidelines for efficient and effective
Human Resource management at ICI Pakistan. The policy Overall, voluntary targets for each of these areas of operation
is designed to be flexible and dynamic to cater to a variety are set by the heads of the respective departments, in
of circumstances and contexts, and its implementation is consultation and agreement with the Chief Executive,
driven by sound judgement, Company policies, management Executive Management Team, or Board of Directors, as
systems and compliance with applicable laws. and where applicable. In addition to these stakeholders,
specific governing bodies/management teams (such as the
The highest governing body relating to HR practices at Sustainability Council for HSE&S matters, or the Trustees of
the Company is the Human Resource & Remuneration the ICI Pakistan Foundation for community and CSR matters)
Committee, which comprises members of the Board of are also responsible for approving and setting targets in
Directors, the Chief Executive and the General Manager collaboration with other key stakeholders.
HR. This committee is responsible for recommending HR
management policies to the Board of Directors, along Clear grievance mechanisms exist in the Company to support
with other responsibilities relating to the appointment, ethical and fair social performance. Our whistleblowing
remuneration, succession-planning and reporting lines of key programme, Speak Up, is open to all employees and is a
senior executives of the Company. provision made for the confidential reporting of Code of
Conduct violations. Detailed information on the Code of
The Company aims to establish policies and practices Conduct can be found in the Corporate Governance and
to attract, develop, and retain highly motivated and Compliance section of the Annual Report (page 58). Other
professionally competent people, and to provide them with an complaints or issues can be raised and discussed directly
enabling work environment and direction required to achieve with line managers.
140 ICI Pakistan Limited Annual Report 2016 -17

Sustainability Highlight

HSE&S Champions Project,


Life Sciences Business
The HSE&S Champions Project was an initiative of our Each month’s project was executed by a team, with assigned
Life Sciences Business that aimed to improve HSE&S responsibilities for each team member. Frequent communication
awareness and compliance at all levels throughout the was supplemented by reviews and risk assessments which
Business, which includes ten offices and eight sites. We later led to action planning. The core objectives of the project
have included it in this report as a Sustainability Highlight included: defining KSIs that would potentially impact KPIs;
as this project was a great example of the management and motivating and enabling teams across the Business to
living and actively propagating our HSE&S values across understand and own HSE&S policies and procedures, thereby
Businesses and functions of the Company. creating a culture of Behaviour Based Safety in which individuals
adopt good practices on a personal level.
Led by the Business Executive Team, or BET, (which includes
the Vice President, heads of the Business’s three Divisions, as
well as the supply chain manager, HR manager and finance Key Achievements
manager), the initiative aimed not just to promote a safe and Road Safety Awareness Month
healthy working environment, but also to engage employees in (December 2016)
ongoing learnings regarding health, safety and environmental Awareness and training was carried out for over 700
issues. The seven-month long campaign focussed on a new employees on road safety in collaboration with the Motorway
HSE&S topic each month, with BET members taking turns Police. The campaign was extended to the local public with
to lead each month’s efforts, which included awareness road safety brochures and emergency stickers distributed in
campaigns, trainings and other activities. collaboration with the Motorway Police.
ICI Pakistan Limited Annual Report 2016 -17 141

2016 2017
Fire Safety Awareness Month HSE&S
Dec Jan Feb Mar Apr May Jun
(January 2017) Project
Site inspections, basic first aid, fire safety management and
Road Safety
firefighting trainings were carried out at various locations.
Fire Safety
Plant and Warehouse Safety Awareness Month Plant Safety
(February 2017)
Health and
Plant and warehouse safety training sessions were Hygiene
conducted at all Life Sciences Business sites to emphasise
our aim of ‘zero injuries by choice.’ Risk assessments were Office Safety
conducted following these, and improvement areas were Environment
highlighted and communicated to the relevant teams for and
Conservation
further action.
Product
Stewardship
Health and Hygiene Awareness Month
(March 2017) Environment and Conservation
Training of 460 employees was conducted during the Annual Awareness Month (May 2017)
Business Conference 2017 in Thailand. Weekly fitness The team converted 0.2 tons of used A4 paper from across
and hygiene challenges, along with online quizzes, helped the Business’s locations into note pads, saving three trees,
employees achieve better health and motivation at work. 10,000 litres of water, 130 kg of waste, 440 kg of CO2, 3
gigajoules of energy and 0.5 kg of nitrous oxide. Employees
Office Safety Awareness Month also adopted about 150 plants, and attended a training
(April 2017) session conducted in collaboration with the WWF Green
Employees were encouraged to own HSE&S by seeking Office initiative on environmental impact and resource
out and remedying office safety hazards themselves. Some conservation.
great insights into office safety were achieved, as well as fun
activities such as a scavenger hunt, and quizzes, with prizes Product Stewardship Awareness Month
and mementoes presented to participants at the month’s (June 2017)
end. Customer awareness sessions were held, along with a
product waste risk management exercise being completed,
and relevant SOPs being updated. Quizzes and creative
challenges were planned to encourage employee
engagement.
142 ICI Pakistan Limited Annual Report 2016 -17

Occupational Health
and Safety
Key performance indicators
Health, Safety and 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Security Target

Total reportable injury \million


rate employees/ hours 0.18 0.34 0 0.33 0.16 0 0.44 0
supervised contractors

Occupational illness \million 0 0 0 0 0 0 0 0


rate employees hours

Total illness absence % 1.76 1.72 1.83 1.51 1.23 1.17 1.43 1.15
rate employees

Fatalities: employees,
supervised and number 0 1 0 0 0 0 1 0
independent
contractors

Total reportable injury \million


rate independent hours 0 0 0 0.56 0 0 0.33 0
contractors

Lost time injury


independent number 0 0 0 2 0 0 0 0
contractors

% of sites with BBS % 100 100 100 100 100 100 100 100
programme

Distribution incidents number 1 0 0 0 0 0 1 0

Motor vehicle incident number 2 0 0 0 1 0 2 0


with injury

Overview 2016-17 and canteen management practices at ICI Pakistan Limited.


The reportable injury rate for employees, and supervised and
independent contractors was 0.44 and 0.33 respectively in 2016- The HSE&S performance of our Polyester, Soda Ash, Life
17. During the year there were four reportable incidents involving Sciences and Chemicals Businesses stood at: 10.05, 12.3,
employees and supervised contractors, and one injury involving 1.05, and 0.27 million man-hours without Lost Time Injury,
an independent contractor. The Life Sciences Business reported respectively, in 2016-17.
two road incidents, one of which resulted in a fatality. The incident
was thoroughly investigated, following which new protocols and A comprehensive site security review was undertaken for all
risk assessment regimes were developed to avoid recurrence of Businesses and locations, including the newly acquired Cirin
such an unfortunate incident in the future. Pharmaceuticals (Private) Limited manufacturing site. In 2016-
17, major focus was placed on employee training on various
In the Chemicals Business, we had an injury incident facets of HSE&S, including upgradation of existing procedures
regarding handling of hazardous materials. Following this, and protocols. A sharper focus on operational discipline
an internal investigation was carried out, and based on the and even stricter adherence to the Company’s Health,
recommendations of the investigation, material-handling Safety, Environment and Security Management System and
procedures were scrutinised and the system was improved investigation outcomes is being planned for 2017-18 to avoid
to avoid any recurrences. The Head Office reported a food any future mishaps. The focus on improving the Operational
poisoning incident, which resulted in thorough investigation and Eco Efficiency (OEE) footprint continues, with sustainability
review, and the subsequent transformation of food handling plans in place for implementation in all Businesses.
ICI Pakistan Limited Annual Report 2016 -17 143

Training and
Education
Key performance indicators

Training and 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Education Target

Average hours Average per 4.35


of training per employee:
employee (gender 33.2;
and grade) Male: 38.1;
Female:
30.5

On-line P&DD % 83 NR NR 98 98 98 98.5 100%


participation

Management No. of 211 NR NR NR NR 572 886 90%


Development Managers
Programme

Employee %/ 82 87 NR NR 35 58  68  75 


Engagement Index* percentile
*Numbers reported for 2011-12 are percentages of scores achieved on a five-point rating scale. From 2014-15 onwards, these numbers are a percentile of engagement score in terms of
all participating organisations.

Average Hours of Training Per Employee (Gender and Grade)


57.6 57.3
38.1

46.9
30.5 44
39.6 40.9
36.8

28.9 29.8
26.3
19.6

Male Female
G30 G31 G32 G33 G34 G35 G36 G37 G38 Trainee
WL-4

Our popular Leadership Development Roadmap continues


Overview 2016-17 to be a key ingredient for training and development,
During 2016-17, a renewed focus on training and development providing a structured and integrated talent development
prevailed. A total of 33,036 man-hours were invested in framework. With customised training modules, executive
employee training, focussing on functional and leadership coaching sessions and learning projects, more than
development, which translated to an increase of 17% over the 886 managers participated in the development journey
same period last year. throughout the year.

A critical component for the successful training and In order for line managers to bridge the gap on their HR roles,
development of employees is having a regular, ongoing our flagship HR for Non HR Managers programme continued
performance evaluation and feedback system. Our with an additional 69 managers participating this year. The
Performance and Development Discussion (P&DD) process, Core Development Programme for engineers continued with
accessed via an online application, continues to be an a renewed focus, training 64 managers, while functional and
essential tool in providing constructive and regular feedback managerial trainings progressed as per the training needs
to employees at all levels. This comprehensive measurement assessment.
system allows employees and their managers to assess
performance against set targets and objectives, serving as Along with well-structured training interventions, our
a barometer for the Company’s overall performance. We employees are also exposed to exciting on the job learnings,
achieved a 98.5% participation rate for this process in 2016-17, challenging project work, networking opportunities and
and hope to raise this number even higher going forward. external professional forums to fast-track their career growth.
144 ICI Pakistan Limited Annual Report 2016 -17

Diversity and
Equal Opportunity
Key performance indicators

Diversity and Equal Opportunity 2016-17

Percentage of governance body by gender Male: 7, Female: 2 (22% F, 78% M)

Percentage of employees by gender Total: 94.4% Male, 5.6% Female


Management: Male 973, Female 44
Trainees: Male 27, Female 15

Percentage of governance body by age Under 30: 0, 30-50: 6 (55.5%), Above 50: 3 (44.4%)

Percentage of employees by age Under 30: 302 (29.7%) . 30-50: 586 (57.6%) , Above 50: 129 (12.7%)

% of governance % of employees by gender % of governance % of employees


body by gender body by age by age
55.5%
Management Trainee 12.7% 29.7%
4.3% 44.4%
22% 35.7% 57.6%

95.7%
78%

64.3%

Male: 7 Female: 2 Male: 973 Female: 44 Male: 27 Female: 15 30-50: 6 Above 50: 3 Under 30: 302 30-50: 586
Above 50: 129

Overview 2016-17 women executives comprise twenty-two percent of our


At ICI Pakistan Limited we are committed to promoting Executive Management Team, the body responsible for the
diversity in the workplace and equal opportunities for all, based management of the organisation on an ongoing basis. While
on merit and suitability. Our Code of Conduct clearly spells out the percentage of women in our overall workforce is still
these principles and they are also supported by our core values relatively low (at 5.6%) we are focussed on increasing this
(Passion for People; Integrity and Responsibility). number going forward. Our gender diversity forum ‘iMPACT
was created to support and promote gender diversity in the
Gender diversity within our workforce is an area where we Company, and is the platform through which diversity-related
intend to make greater progress in the coming years. Today, initiatives are run.
ICI Pakistan Limited Annual Report 2016 -17 145

Non-Discrimination
Key performance indicators
Non-Discrimination 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Total number No. NR NR NR NR NR NR 0 0


of incidents of
discrimination

We also have in place a whistleblowing programme known


Overview 2016-17 as Speak Up, which is open to all employees for the
As enshrined in our Code of Conduct, non-discrimination confidential reporting of any Code of Conduct violations.
is an important part of our value system and cultural ethos This ensures that checks and balances are in place with
at ICI Pakistan Limited. For example, the Code explicitly regard to not just discriminatory practices, but also any
states that suitability of candidates for job opportunities will other violations of the Code.
be determined solely on the basis of objective and non-
discriminatory criteria. In the year 2016-17, there were no reported incidents
of discrimination at the Company. Our five-year target,
determined during this year, is to maintain this status quo,
which we will aim to bolster with our ongoing focus on ethical
and responsible behaviour in all our operations.
146 ICI Pakistan Limited Annual Report 2016 -17

Sustainability Highlight

Providing Accessible
Healthcare with the
Hamqadam Community Clinic
Investing in basic infrastructure and critical services The clinic is run by a lady doctor with the support of a lady
in our communities is an important part of our health worker, along with a leprosy, ophthalmic and tuberculosis
sustainability approach as it allows us to impact technician, and an ambulance driver. Within the first eighteen
communities near us in indirect, but profoundly months of its operations, recorded numbers of patient visits
important and life-affirming ways. This Sustainability to the clinic have demonstrated its clear value to the local
Highlight illustrates the clearly demonstrated positive community. Since the clinic’s inception in February 2016, a total
impact of a well-managed community investment of 6,944 OPD cases have been catered to, with 346 pregnant
project that is aligned with local community needs. women registered at the clinic, and 998 children under the age
of five being monitored for immunisation and nutrition through
Despite its geographically remote location, Khewra is home the ‘Road to Health’ chart. These numbers translate into human
to a local population of over 80,000 people. One of the main stories of safer pregnancies and childbirth, improved early
issues facing this population for many years has been that childhood development, and better overall mother and child
quality healthcare services can be hard to come by locally. health and wellbeing. Adequate medical care and nutrition during
This was of particular concern with regard to at-risk or pregnancy and early childhood has been demonstrated to have
vulnerable groups, such as women and children. Previously, impacts on the health of individuals later in life.
pregnant women and young children had to travel long
distances to access adequate healthcare facilities. Recently, an ultrasound machine has also been provided to the
clinic to aid in examination and diagnosis of patients. A state-
In 2016, ICI Pakistan Limited set up a mother and child of-the-art ambulance was also donated to the clinic at the
healthcare community clinic in Khewra in response to this time of inauguration to cater to emergencies in the local area.
need. Funded by the ICI Pakistan Foundation and run in So far, the ambulance has been utilised for 74 trips and has
partnership with Marie Adelaide Leprosy Centre (MALC), addressed emergency needs to transfer patients from Khewra
the clinic has now been in operation for over a year, and is to Rawalpindi/Islamabad, Lahore, Pind Dadan Khan, Chakwal,
proving to be a valuable addition to Khewra’s healthcare Kalarkahar, Sargodha, Jhelum, and Mandi Bahauddin.
infrastructure.
ICI Pakistan Limited Annual Report 2016 -17 147

Local Communities
Key performance indicators

Local Communities 2011 2012 2013 H1 2013-14 2014-15 2015-16 2016-17 2020-21
Target

Community PKR 24.3 6 7.45 17.45 20 20 20 30


programme Million
investment

Overview 2016-17
A percentage of the Company’s annual after tax profits are Currently, the community investment programme supports
allocated to the ICI Pakistan Foundation to fund approved commitments to several ongoing projects, as well as
community investment initiatives. While in 2016-17, there was no collaborating with reputed partners on new projects as well.
increase or decrease in our community investment commitment Detailed information on community investment initiatives is
as compared to last year, going forward, with the growth and available in the Community Investment section of the Annual
expansion of the Company, we anticipate the allocation of an Report (page 53).
increased amount to support community investment.
148 ICI Pakistan Limited Annual Report 2016 -17

GRI Content
Index
CORE DISCLOSURES
Indicators Response/Section

Organisational Profile
Disclosure 102-1 Name of the organisation Section: Company Information – Page
67, AR

Disclosure 102-2 Activities, brands, products and services Section: ICI Pakistan Limited at a Glance
Activities, brands, products and services – Page 2-5, AR
Section: Soda Ash Business – Page 92-
95, AR
Section: Life Sciences Business – Page
96-103, AR
Section: Chemicals – Page 104-107, AR
Section: Polyester – Page 108-111, AR

Disclosure 102-3 Location of headquarters Section: Company Information – Page


67, AR

Disclosure 102-4 Location of operations Section: ICI Pakistan Limited at a Glance


– Page 2-5, AR

Disclosure 102-5 Ownership and legal form Section: ICI Pakistan Limited at a Glance
– Page 2-5, AR
Section: Corporate Governance and
Compliance – Page 58-61, AR

Disclosure 102-6 Markets served Section: ICI Pakistan Limited at a Glance


– Page 2-5, AR

Disclosure 102-7 Scale of the organisation Section: ICI Pakistan Limited at a Glance
– Page 2-5, AR
Section: Report of the Directors for the
Year Ended June 30, 2017 – Page 74-86,
AR
Section: ICI Pakistan Limited
Unconsolidated Financial Statements –
Page F36-F37
ICI Pakistan Limited Annual Report 2016 -17 149

Disclosure 102-8 Information on employees and other Section: ICI Pakistan Limited
workers Unconsolidated Financial Statements –
Page F36-F37
Section: Diversity and Equal Opportunity
– Page 144, AR
Non-Management Staff – 382 (100% Male,
0% Female)
Trainees (42) are employees on temporary
employment contracts.
Employees perform significant portion of
ICI Pakistan Limited’s activities.
No variations in the numbers reported.
Data was compiled by the Corporate
HR Department as per actual and no
assumptions are made.
ICI Pakistan Limited will be reporting
Region wise data in next year’s report.

Disclosure 102-9 Supply chain Section: Sourcing – Page 129, AR

Disclosure 102-10 Significant changes to the organisation Section: Sourcing – Page 129, AR
and its supply chain Section: ICI Pakistan Limited
Consolidated Financial Statements –
Page F68-F69

Disclosure 102-11 Precautionary principle or approach Section: Corporate Governance and


Compliance: Code of Conduct – Page 58,
AR

Disclosure 102-12 External initiatives Response: GRI Standards adopted for the
2016-17 Sustainability Report

Disclosure 102-13 Membership of associations Response: Chamber of Commerce;


Enivronmental Protection Agency (all
provinces); Competition Commission of
Pakistan; National Board of Boilers and
Pressure Vessels; National Environmental
Quality Standards; Pakistan Business
Council (PBC); Pakistan Institute of
Corporate Governance; Management
Association of Pakistan (MAP); Overseas
Islamic Chamber of Commerce and
Industry (OICCI); WWF Green Office

Strategy
Disclosure 102-14 Statement from senior decision-maker Section: Message from the CE – Page
16-17, AR
150 ICI Pakistan Limited Annual Report 2016 -17

Ethics and integrity


Disclosure 102-16 Values, principles, standards and norms Section: Our Vision – Page 10, AR
of behaviour Section: Our Values – Page 11, AR
Section: Our Code of Conduct – Page 14,
AR
Section: Sustainability Guiding Principle –
Page 15, AR

Governance
Disclosure 102-18 Governance structure Section: Board and Management
Committees – Page 66, AR
Section: Company Information – Page
67, AR
Section: ICI Pakistan Limited at a Glance
– Page 2-5, AR
Section: Sustainability Strategy &
Sustainability Council – Page 118-119, AR

Stakeholder Engagement
Disclosure 102-40 List of stakeholder groups Section: Stakeholder Engagement – Page
123, AR

Disclosure 102-41 Collective bargaining agreements Response: 382 employees, i.e., all non-
management staff, covered by collective
bargaining agreements (27% of employees)

Total number of employees: management


1,017; non-management 382; trainees 42

Disclosure 102-42 Identifying and selecting stakeholders Section: Stakeholder Engagement – Page
123, AR

Disclosure 102-43 Approach to stakeholder engagement Section: Stakeholder Engagement – Page


123, AR

Disclosure 102-44 Key topics and concerns raised Section: Stakeholder Engagement – Page
123, AR

Reporting Practice

Disclosure 102-45 Entities included in the consolidated Section: ICI Pakistan Limited at a Glance
financial statements – Page 2-5, AR
Section: ICI Pakistan Limited
Consolidated Financial Statements –
Page F68-F69
Response: The ICI Pakistan Group
consists of:
1. ICI Pakistan Limited
2. ICI Pakistan PowerGen Limited
3. Cirin Pharmaceuticals (Private) Limited
4. NutriCo Morinaga (Private) Limited
However the Sustainability Report 2016-17
only covers ICI Pakistan Limited

Disclosure 102-46 Defining report content and topic Section: About the Report – Page 120, AR
boundaries Section: Materiality Assessment – Page
121-122, AR

Disclosure 102-47 List of material topics Section: Materiality Assessment – Page


121, AR
ICI Pakistan Limited Annual Report 2016 -17 151

Disclosure 102-48 Restatements of information Response: Not applicable – no


restatements of information given

Disclosure 102-49 Changes in reporting Response: ICI Pakistan Limited


transitioned to GRI Standards for
sustainability reporting, while also
reporting the list of material topics and
topic boundaries for the first time.
Section: About the Report – Page 120, AR

Disclosure 102-50 Reporting period Section: About the Report – Page 120, AR

Disclosure 102-51 Date of most recent report Response: October 25, 2016
(Sustainability Report 2015-16)

Disclosure 102-52 Reporting cycle Section: About the Report – Page 120, AR

Disclosure 102-53 Contact point for questions regarding the Section: About the Report – Page 120, AR
report

Disclosure 102-54 Claims of reporting in accordance with Section: About the Report – Page 120, AR
the GRI Standards

Disclosure 102-55 GRI Content Index Section: About the Report – Page 120, AR
GRI Content Index – Page 148-157

Disclosure 102-56 External Assurance Section: About the Report – Page 120, AR
Section: External Assurance – Page 158-
159, AR

TOPIC SPECIFIC STANDARDS


Category: Economic
GRI 201 ECONOMIC PERFORMANCE

Disclosure 201-1 Direct economic value generated and Section: ICI Pakistan Limited
distributed Unconsolidated Financial Statements –
Page F04-F09

Disclosure 201-2 Financial implications and other risks and Response: Information Unavailable.
opportunities due to climate change ICI Pakistan Limited employs a robust
Enterprise Risk Management (ERM)
framework, which is integrated across the
organisation to identify and address risks.
Impact of climate change will be assessed
in the forthcoming year and will become
part of next year’s report.

Disclosure 201-3 Defined benefit plan obligations and Response: Information unavailable.
other retirement plans ICI Pakistan Limited has a benefit and
retirement plan in place for its employees.
The relevant department has been
intimated of GRI requirements against this
disclosure and will be a part of next year’s
report.

Disclosure 201-4 Financial assistance received from Section: ICI Pakistan Limited
government Unconsolidated Financial Statements –
Page F36
152 ICI Pakistan Limited Annual Report 2016 -17

GRI 202 MARKET PRESENCE


Disclosure 202-1 Ratios of standard entry level wage by Response: Confidentiality Constraints.
gender compared to local minimum wage ICI Pakistan Limited adheres to all local
and federal laws with regards to minimum
wage and ensures zero discrimination on
the basis of gender

Disclosure 202-2 Proportion of senior management hired Response: Karachi: 66%; Lahore: 100%;
from the local community Sheikhupura: Nil; Khewra: Nil.
Senior management is defined as
employees atG37-plus-level, excluding
EMT. Local community defined as
those residing in and/or hailing from the
significant location identified. Nil in Khewra
and Sheikhupura due to lack of qualified
local personnel.

GRI 203 INDIRECT ECONOMIC IMPACTS


Disclosure 203-1 Infrastructure investments and services Section: Local Communities – Page 147,
supported AR
Section: Community Investments: Giving
back to our communities – Page 53-55, AR

Disclosure 203-2 Significant indirect economic impacts Section: ICI Pakistan Limited
Unconsolidated Financial Statements –
Page F36

GRI 204 PROCUREMENT PRACTICES


Disclosure 204-1 Proportion of spending on local suppliers Response: Information Unavailable.
The data related to this disclosure is not
present as a consolidated quantifiable
value. Will be made part of the report next
year.

GRI 205 ANTI-CORRUPTION


Disclosure 205-1 Operations assessed for risks related to Response: Information Unavailable.
corruption ICI Pakistan Limited does not assess
Businesses/operations individually, but
covers these through its Code of Conduct,
which is signed by all employees and
vendors upon engagement with the
Company, and must be adhered to.

Disclosure 205-2 Communication and training about anti- Response: Information Unavailable
corruption policies and procedures ICI Pakistan Limited does not assess
Businesses/Operations individually, but
covers it through the Code of Conduct that
is signed by all employees and vendors
upon engagement with the company.

Disclosure 205-3 Confirmed incidents of corruption and Response: None


actions taken

GRI 206 ANTI-COMPETITIVE BEHAVIOR


Disclosure 206-1 Legal actions for anti-competitive Response: None
behaviour, anti-trust, and monopoly
practices
ICI Pakistan Limited Annual Report 2016 -17 153

Category: Environmental
GRI 302 Energy
Disclosure 302-1 Energy Consumption within the Section: Energy – Page 132, AR
organisation Response: Standard calorific values of
fuels are used for conversion

Disclosure 302-2 Energy Consumption outside of the Response: None


organisation

Disclosure 302-3 Energy intensity Section: Energy – Page 132, AR

GRI 303 Water


Disclosure 303-1 Water withdrawal by source Section: Water – Page 134, AR
Response: At the Polyester Business:
Groundwater
At the Soda Ash Business: Groundwater
and river water
Percentage of sites with sustainable
fresh water: This percentage represents
sites that have the capability to contain
contaminated water within the plant
premises.

Disclosure 303-2 Water sources significantly affected by Response: None


withdrawal of water

Disclosure 303-3 Water recycled and reused Section: Water – Page 134, AR

GRI 305 Emissions


Disclosure 305-1 Direct (Scope 1) GHG emissions Section: Emissions – Page 136, AR
Response: ICI Pakistan Limited reporting
is compliant with National Environment
Quality Standards (NEQS)
Factors used in the calculation of
emissions are based on the current
International Energy Agency

Disclosure 305-2 Energy indirect (Scope 2) GHG emissions Section: Emissions – Page 136, AR
Response: ICI Pakistan Limited reporting
is compliant with National Environment
Quality Standards (NEQS)
Factors used in the calculation of
emissions are based on the current
International Energy Agency

Disclosure 305-4 GHG emissions intensity Section: Emissions – Page 136, AR


Response: ICI Pakistan Limited reporting
is compliant with National Environment
Quality Standards (NEQS)

Disclosure 305-5 Reduction of GHG emissions Section: Emissions – Page 136, AR


Response: ICI Pakistan Limited reporting
is compliant with National Environment
Quality Standards (NEQS)

Disclosure 305-6 Emissions of ozone-depleting substance Response: No chemical classified as an


(ODS) ODS is listed in the Chemical Substance
Inventory of ICI Pakistan Limited
154 ICI Pakistan Limited Annual Report 2016 -17

Disclosure 305-7 Nitrogen oxides (NOx), sulfur oxides Section: Emissions – Page 136, AR
(SOx), and other significant air emissions Response: ICI Pakistan Limited reporting
is compliant with National Environment
Quality Standards (NEQS)

GRI 306 Effluents and Waste


Disclosure 306-1 Water discharge by quality and Response: Information Unavailable.
destination The total volume of water discharged to
specific water bodies was not quantified,
however, each Business maintains a record
of all water discharge to municipal sewers
and other in-house storage options. A
proportion of water used is recycled for
horticultural purposes.

Disclosure 306-2 Waste by type and disposal method Section: Effluents and Waste – Page 137,
AR

Disclosure 306-3 Significant spills Response: None

Disclosure 306-4 Transport of hazardous waste Response: None

Disclosure 306-5 Water bodies affected by water Response: None


discharge and/or runoff

GRI 307 Environmental Compliance


Disclosure 307-1 Non-compliance with environmental laws Response: ICI Pakistan Limited has
and regulations not identified any non-compliance with
environmental laws and/or regulations for
the year 2016-17

Category: Social
GRI 401 EMPLOYMENT
Disclosure 401-1 New employee hires and employee Response: New Hires: Management 243;
turnover Trainee 29
Employee Turnover (Voluntary, Dismissal,
Retirement, Death included)
Total leavers (Management): 177
Rate: 17%

Disclosure 401-2 Benefits provided to full-time employees Response: Life insurance, healthcare,
that are not provided to temporary or disability coverage, parental leave, and
part-time employees retirement provisions are all provided to
ICI Pakistan Limited employees as per the
Company’s Policy.
Significant locations of operation are all
ICI Pakistan Limited manufacturing sites,
offices and warehouses.

Disclosure 401-3 Parental leave Response: Information Unavailable.


ICI Pakistan Limited has a parental leave
policy for all its employees. Quantified data
will be reported in next year’s report.

GRI 402 LABOR/MANAGEMENT RELATIONS

Disclosure 402-1 Minimum notice periods regarding Response: Four weeks


operational change also mentioned in collective agreements
ICI Pakistan Limited Annual Report 2016 -17 155

GRI 403: OCCUPATIONAL HEALTH AND SAFETY


Disclosure 403-1 Workers representation in formal joint Response: Our manufacturing sites have
management–worker health and safety various systems in place to promote such
committees programmes. Monthly joint management
and worker safety meetings are one such
process, steered by line managers and
occasionally the section head of all functional
departments. The agenda is set by the HSE
Department and feedback is recorded.

These meetings ensure 100% participation


by the workforce

Disclosure 403-2 Types of injury and rates of injury, Section: Occupational Health & Safety –
occupational diseases, lost days, and Page 142, AR
absenteeism, and number of work-
related fatalities

Disclosure 403-3 Workers with high incidence or high risk Response: As per the ICI Pakistan
of diseases related to their occupation Limited HSE&S Management System and
the company’s Occupational Health Policy,
areas at all manufacturing sites have been
assessed for health risks, and, accordingly,
Health Monitoring Programmes have been
developed for employees. For example,
Laboratory employees are assessed for
lung-related diseases that may rise due
to fume inhalation. Employees working in
high noise areas are annually checked for
any depletion in hearing.

Disclosure 403-4 Health and safety topics covered in Response: None


formal agreements with trade unions

GRI 404 TRAINING AND EDUCATION


Disclosure 404-1 Average hours of training per year per Section: Training & Education – Page 143,
employee AR

Disclosure 404-2 Programs for upgrading employee skills Response: Code of Conduct, HSE
and transition assistance programs Awareness, Performance Management
Leadership Essentials: System, HR for Non HR Managers,
Discovering the Leadership Within,
Behavioural Based Interviewing Skills.
Leadership Development Roadmap:
Leadership Development Journey, Leading
Beyond, Leading and Developing Teams,
Self-development Programme, Creative
Thinking & Collaboration, Greater Self,
Leading Teams for Impact.
Functional skills development programs:
Core Development Program for Engineers.

Disclosure 404-3 Percentage of employees receiving Section: Training & Education – Page 143,
regular performance and career AR
development reviews
156 ICI Pakistan Limited Annual Report 2016 -17

GRI 405: DIVERSITY AND EQUAL OPPORTUNITY


Disclosure 405-1 Diversity of governance bodies and Section: Diversity & Equal Opportunity –
employees Page 144, AR

Disclosure 405-2 Ratio of basic salary and remuneration Response: Confidentiality Constraints. ICI
of women to men Pakistan Limited is an equal opportunity
employer and does not differentiate on
the basis of gender in benefits, salary and
remuneration.

GRI 406: NON-DISCRIMINATION


Disclosure 406-1 Incidents of discrimination and Section: Non-Discrimination – Page 145,
corrective actions taken AR

GRI 410: SECURITY PRACTICES


Disclosure 410-1 Security personnel trained in human Response: 100% of security staff is on
rights policies or procedures various security and safety procedures
of ICI Pakistan Limited that cover human
rights policies.

GRI 413: LOCAL COMMUNITIES


Disclosure 413-1 Operations with local community Section: Local Communities – Page 147,
engagement, impact assessments, and AR
development programs Section: Community Investment – Page
53-55, AR

Disclosure 413-2 Operations with significant actual and Section: Local Communities – Page 147,
potential negative impacts on local AR
communities
Community Investment – Page 53-55, AR

GRI 415: PUBLIC POLICY


Disclosure 415-1 Political contributions Response: None. ICI Pakistan Limited
did not make any political contribution in
2016-17

GRI 416: CUSTOMER HEALTH AND SAFETY


Disclosure 416-1 Assessment of the health and safety Response: ICI Pakistan Limited
impacts of product and service firmly believes in product stewardship
categories and covers this through the ICI
Pakistan Limited Standard on Product
Management, Distribution and Use.

Response: 100% of products and


services are covered by, and assessed for
compliance to the procedure.

Disclosure 416-2 Incidents of non-compliance concerning Response: ICI Pakistan Limited did not
the health and safety impacts of identify any incidents of non-compliance
products and services with regulations and/or voluntary codes in
2016-17.
ICI Pakistan Limited Annual Report 2016 -17 157

GRI 417: MARKETING AND LABELING


Disclosure 417-1 Requirements for product and service Response: ICI Pakistan Limited covers
information and labelling the product and service information and
labelling via its HSE&S Management
System Standard – Guidelines for
HSE Classification, Labelling and
Documentation for Distribution, which
ensures all information pertaining to
sourcing of components, content, safe use
and handling, disposal are covered.

Response: 100% of our products and


services are covered by and assessed for
compliance with the procedures.

Disclosure 417-2 Incidents of non-compliance concerning Response: ICI Pakistan Limited did not
product and service information and identify any incidents of non-compliance
labelling with regulations and/or voluntary codes
2016-17.

Disclosure 417-3 Incidents of non-compliance concerning Response: ICI Pakistan Limited did not
marketing communications identify any incidents of non-compliance
with regulations and/or voluntary codes
2016-17.

GRI 418: CUSTOMER PRIVACY


Disclosure 418-1 Substantiated complaints concerning Response: ICI Pakistan Limited has not
breaches of customer privacy and losses identified any substantiated complaints in
of customer data 2016-17.

GRI 419: SOCIOECONOMIC COMPLIANCE


Disclosure 419-1 Non-compliance with laws and Response: None
regulations in the social and economic
area
158 ICI Pakistan Limited Annual Report 2016 -17

Independent Limited Assurance Report on the Sustainability Report of


ICI Pakistan Limited for the Year Ended June 30, 2017

To the Board of Directors of 5. Our independence and quality con-


ICI Pakistan Limited trol
We have complied with the independence and the other
1. Introduction and scope ethical requirements of the Code of Ethics for Chartered
Accountants issued by the Institute of Chartered Accountants
We have undertaken a limited assurance engagement on the of Pakistan, which is founded on fundamental principles of
Sustainability performance contained on pages 112 to 157 integrity, objectivity, professional competence and due care,
of the Annual Report 2016-17 of ICI Pakistan Limited (the confidentiality and professional behaviour.
Company) for the year ended June 30, 2017 prepared by the
management of the Company. The Company’s Sustainability The Firm applies International Standard on Quality Control
performance (the Sustainability Report) has been prepared 1 “Quality Control for firms that perform Audits and Reviews
by the management in accordance with the Core criteria of of Historical Financial information, and Other Assurance and
GRI Standards. The Company has defined the scope of the Related Services Engagements” and accordingly maintains
Report in the section “About the Report” on page 120 of the a comprehensive system of quality control including
Annual Report 2016-17. documented policies and procedures regarding compliance
with ethical requirements, professional standards and
The scope of our limited assurance applicable legal and regulatory requirements.
engagement included:
6. Our responsibility and summary of
a) review of structure of the Sustainability Report; and work performed
b) review that the subject matter and information (except for
data/information verification and appropriateness thereof) Our responsibility is to express a limited assurance
presented in the Sustainability Report are in accordance with conclusion on the Sustainability Report based on the
the Core Criteria of the GRI standards. procedures we have performed and the evidence we have
obtained. We conducted our limited assurance engagement
2. Criteria in accordance with International Standard on Assurance
Engagement (ISAE) 3000, ‘Assurance Engagements other
The criteria used by the Company to prepare the than audits or reviews of historical financial statements’
Sustainability Report is the Core Criteria of the GRI issued by the International Auditing and Assurance Standards
Standards, as described on page 120 of the Annual Report Board. This standard requires that we plan and perform this
2016-17 (the Criteria). engagement to obtain limited assurance about whether the
Sustainability Report is free from material misstatement.
3. Management’s responsibility
A limited assurance engagement involves assessing the
The Company’s management is responsible for the suitability in the circumstances of Company’s use of the
preparation of the Sustainability Report in accordance Criteria as the basis for the preparation of the Sustainability
with the Criteria. This responsibility includes the design, Report, assessing the risks of material misstatement of
implementation and maintenance of internal control relevant the Sustainability Report whether due to fraud or error,
to the preparation of the Sustainability Report that is free responding to the assessed risks as necessary in the
from material misstatement, whether due to fraud or error. circumstances, and evaluating the overall presentation of
the Sustainability Report. A limited assurance engagement
4. Limitations is substantially less in scope than a reasonable assurance
engagement in relation to both the risk assessment
Our scope excluded verification of the data reported for procedures, including an understanding of internal control,
sustainability KPIs and verification of quantitative and and the procedures performed in response to the assessed
qualitative data / information presented in the Sustainability risks.
Report.
ICI Pakistan Limited Annual Report 2016 -17 159

The procedures performed in a limited assurance the evidence we have obtained is sufficient and appropriate to
engagement vary in nature and timing from, and are less in provide a basis for our limited assurance conclusion.
extent than for, a reasonable assurance engagement; and Based on our limited assurance engagement, nothing has
consequently, the level of assurance obtained in a limited come to our attention that causes us to believe that the
assurance engagement is substantially lower than the Company’s Sustainability Report for the year ended 30 June,
assurance that would have been obtained had a reasonable 2017 is not prepared, in all material respects, in accordance
assurance engagement been performed. Accordingly, with the Criteria.
the procedures selected were based on our professional
judgement. Within the scope of our work, we performed 8. Restriction on use
amongst other the following procedures:
Our responsibility in performing our limited assurance
• reviewed the Sustainability Report to check that it complies activities is to the Board of Directors of ICI Pakistan Limited
with the requirements of section 2 of GRI 101 (Foundation) only and in accordance with the terms of engagement as
including clauses 2.1 to 2.6; agreed with them. We do not therefore accept or assume any
responsibility for any other purpose or to any other person or
• reviewed the Sustainability Report to check that it complies organization. Any reliance that any third party may place on
with the reporting requirements of GRI 102 (General the Sustainability Report is entirely at its own risk.
Disclosures);

• reviewed the Sustainability Report to check that it complies


with the reporting requirements of GRI 103 (Management
Approach) for each material topic; and
A.F.Ferguson & Co.
• reviewed the Sustainability Report to check that it complies Chartered Accountants
with the reporting requirements for at least one topic (a member firm of the PwC network)*
specific disclosure. Karachi, Pakistan

7. Limited assurance conclusion Date: August 16, 2017

Our conclusion has been formed on the basis of, and is Engagement Partner: Syed Fahim ul Hasan
subject to, the matters outlined in this report. We believe that

“PwC” is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide
services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent
of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts
or omissions of any of its member firm nor can it control the exercise of their professional judgment or bind them in any way
160 ICI Pakistan Limited Annual Report 2016 -17

Financial Performance

When Innovation
Meets
Performance
Results matter. And when innovative thinking meets
financial performance, the results speak for themselves.

This section provides a complete record of ICI Pakistan Limited’s financials for
2016-17.
ICI Pakistan Limited Annual Report 2016 -17 161
162 ICI Pakistan Limited Annual Report 2016 -17
ICI Pakistan Limited Annual Report 2016 -17 F 01

ICI Pakistan Limited


Financial Statements
ICI Pakistan Limited Annual Report 2016 -17 F 03

Auditors’ Report to the Members


We have audited the annexed unconsolidated balance sheet of ICI Pakistan Limited (the Company) as at 30 June 2017 and the
related unconsolidated profit and loss account, unconsolidated statement of comprehensive income, unconsolidated cash flow statement
and unconsolidated statement of changes in equity together with the notes forming part thereof, for the year then ended and we state
that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of internal control, and prepare and present
the above said statements in conformity with the approved accounting standards and the requirements of the repealed Companies
Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit
also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall
presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due
verification, we report that:

a) in our opinion, proper books of account have been kept by the Company as required by the repealed Companies Ordinance,
1984;

b) in our opinion:

i) the unconsolidated balance sheet and unconsolidated profit and loss account together with the notes thereon have
been drawn up in conformity with the repealed Companies Ordinance, 1984, and are in agreement with the books of
account and are further in accordance with accounting policies consistently applied, except for changes as stated in
note 45 to the accompanying unconsolidated financial statements with which we concur;

ii) the expenditure incurred during the year was for the purpose of the Company's business; and
iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the
objects of the Company;

c) in our opinion and to the best of our information and according to the explanations given to us, the unconsolidated balance
sheet, unconsolidated profit and loss account, unconsolidated statement of comprehensive income, unconsolidated cash flow
statement and unconsolidated statement of changes in equity together with the notes forming part thereof conform with approved
accounting standards as applicable in Pakistan, and, give the information required by the repealed Companies Ordinance, 1984,
in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at 30 June 2017 and
of the profit, its comprehensive income, cash flows and changes in equity for the year then ended; and

d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the
Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

Date: 28 July, 2017 EY Ford Rhodes


Chartered Accountants
Karachi Shariq Ali Zaidi
F 04 ICI Pakistan Limited Annual Report 2016 -17

Unconsolidated Balance Sheet


As at June 30, 2017

Amounts in PKR '000

Note June 30, June 30,


2017 2016

ASSETS

Non-current assets
Property, plant and equipment 3 19,613,523 17,040,334
Intangible assets 4 19,273 16,460
19,632,796 17,056,794

Long-term investments 5 2,954,276 1,462,976


Long-term loans 6 370,465 356,330
Long-term deposits and prepayments 7 38,627 33,594
3,363,368 1,852,900
22,996,164 18,909,694
Current assets
Stores, spares and consumables 8 942,636 811,963
Stock-in-trade 9 5,746,647 5,296,746
Trade debts 10 2,547,340 1,640,447
Loans and advances 11 444,191 391,342
Trade deposits and short-term prepayments 12 564,385 428,713
Other receivables 13 1,515,528 726,683
Taxation - net 1,257,222 2,236,155
Cash and bank balances 14 141,748 146,287
13,159,697 11,678,336

Total assets 36,155,861 30,588,030


ICI Pakistan Limited Annual Report 2016 -17 F 05

Amounts in PKR '000

Note June 30, June 30,


2017 2016

EQUITY AND LIABILITIES

Share capital and reserves


Authorised capital
1,500,000,000 (June 30, 2016: 1,500,000,000) ordinary shares of PKR 10 each 15,000,000 15,000,000

Issued, subscribed and paid-up capital 15 923,591 923,591


Capital reserves 16 309,643 309,643
Unappropriated profit 14,950,666 13,183,294
Total equity 16,183,900 14,416,528

Surplus on revaluation of property, plant and equipment 17 743,948 829,645

Non-current liabilities
Provisions for non-management staff gratuity 18 102,289 90,867
Long-term loans 19 4,909,946 3,652,586
Deferred tax liability - net 20 1,231,011 1,430,789
6,243,246 5,174,242
Current liabilities
Trade and other payables 21 10,120,448 7,731,736
Accrued mark-up 102,155 77,663
Short-term borrowings and running finance 22 2,118,446 1,964,433
Current portion of long-term loans 19 643,718 393,783
12,984,767 10,167,615

Total equity and liabilities 36,155,861 30,588,030

Contingencies and commitments 23

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 06 ICI Pakistan Limited Annual Report 2016 -17

Unconsolidated Profit and Loss Account


For the year ended June 30, 2017

Amounts in PKR '000

For the For the


year ended year ended
Note June 30, 2017 June 30, 2016

Turnover 25.1 47,548,639 42,689,368


Sales tax, commission and discounts 24 (6,184,944) (5,734,931)
Net turnover 41,363,695 36,954,437
Cost of sales 25.2 (33,598,220) (30,475,911)
Gross profit 7,765,475 6,478,526
Selling and distribution expenses 27 (2,607,114) (2,118,142)
Administration and general expenses 28 (1,114,785) (881,677)
Operating result 4,043,576 3,478,707
Other charges 29 (143,828) (284,840)
Finance costs 30 (398,079) (383,298)
(541,907) (668,138)
Other income 31 892,701 687,697
Profit before taxation 4,394,370 3,498,266
Taxation 32 (1,098,279) (655,080)
Profit after taxation 3,296,091 2,843,186

Basic and diluted earnings per share (PKR) 33 35.69 30.78

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer

06
ICI Pakistan Limited Annual Report 2016 -17 F 07

Unconsolidated Statement of Comprehensive Income


For the year ended June 30, 2017
Amounts in PKR '000

For the For the


year ended year ended
June 30, 2017 June 30, 2016

Profit after taxation 3,296,091 2,843,186


Items to be reclassified to profit or loss in subsequent periods:
Loss on hedge during the year - (2,285)
Income tax relating to hedging reserve - 731
- (1,554)
Adjustments for amounts transferred to initial carrying amounts of
hedged item - capital work-in-progress - 1,554
- -
Items not to be reclassified to profit or loss in subsequent periods:
Actuarial (loss) / gain on defined benefit plans (74,151) (18,030)
Income tax effect 18,227 4,070
(55,924) (13,960)
Total comprehensive income for the year 3,240,167 2,829,226

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 08 ICI Pakistan Limited Annual Report 2016 -17

Unconsolidated Cash Flow Statement


For the year ended June 30, 2017
Amounts in PKR '000

For the For the


year ended year ended
June 30, 2017 June 30, 2016

Cash flows from operating activities

Cash generated from operations - note 34 5,569,176 4,788,015

Payments for :
Staff retirement benefit plans - note 18.1.2 (66,528) (65,511)
Non-management staff gratuity and eligible retired employees medical scheme (27,855) (29,677)
Taxation (289,286) (709,498)
Interest (360,652) (303,223)
Net cash generated from operating activities 4,824,855 3,680,106

Cash flows from investing activities

Capital expenditure (4,239,054) (4,518,496)


Proceeds from disposal of operating fixed assets 5,366 11,010
Interest received on bank deposits 1,470 795
Investment in subsidiaries / associate (1,491,300) (240,000)
Dividend received 793,000 608,375
Net cash used in investing activities (4,930,518) (4,138,316)

Cash flows from financing activities

Long-term loans obtained 1,896,186 2,552,427


Long-term loans repaid (388,891) (955,556)
Dividends paid (1,560,184) (1,192,827)
Net cash (used in) / generated from financing activities (52,889) 404,044
Net decrease in cash and cash equivalents (158,552) (54,166)
Cash and cash equivalents at the beginning of the year (1,818,146) (1,763,980)
Cash and cash equivalents at the end of the year (1,976,698) (1,818,146)

Cash and cash equivalents at the end of the year comprise of:
Cash and bank balances - note 14 141,748 146,287
Short-term borrowings and running finance - note 22 (2,118,446) (1,964,433)
(1,976,698) (1,818,146)

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
ICI Pakistan Limited Annual Report 2016 -17 F 09

Unconsolidated Statement of Changes in Equity


For the year ended June 30, 2017

Amounts in PKR '000

Issued, Capital Unappropriated Total


subscribed reserves profit
and paid-up
capital

As at July 01, 2015 923,591 309,643 11,483,846 12,717,080


Final dividend for the year ended
June 30, 2015 @ PKR 6.50 per share - - (600,337) (600,337)
Interim dividend for the year ended
June 30, 2016 @ PKR 6.50 per share - - (600,337) (600,337)
- - (1,200,674) (1,200,674)
Profit for the year - - 2,843,186 2,843,186
Other comprehensive income for the year, net of tax - - (13,960) (13,960)
Total comprehensive income - - 2,829,226 2,829,226
Transfer from surplus on revaluation of property,
plant and equipment - incremental depreciation
for the year - net of deferred tax - note 17 - - 70,896 70,896
- - 70,896 70,896

As at June 30, 2016 923,591 309,643 13,183,294 14,416,528


Final dividend for the year ended
June 30, 2016 @ PKR 9.00 per share - - (831,231) (831,231)
Interim dividend for the year ended
June 30, 2017 @ PKR 8.00 per share - - (738,872) (738,872)
- - (1,570,103) (1,570,103)
Profit for the year - - 3,296,091 3,296,091
Other comprehensive income for the year, net of tax (55,924) (55,924)
Total comprehensive income - - 3,240,167 3,240,167
Transfer from surplus on revaluation of property,
plant and equipment - incremental depreciation
for the year - net of deferred tax - note 17 - - 97,308 97,308
- - 97,308 97,308
As at June 30, 2017 923,591 309,643 14,950,666 16,183,900

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 10 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017
1 Status and Nature of Business

ICI Pakistan Limited (“the Company”) is incorporated in Pakistan and is listed on Pakistan Stock Exchange Limited. The Company
is engaged in the manufacture of polyester staple fibre, POY chips, soda ash, specialty chemicals, sodium bicarbonate and
polyurethanes; marketing of seeds, toll manufactured and imported pharmaceuticals and animal health products; and merchanting
of general chemicals. It also acts as an indenting agent and toll manufacturer. The Company’s registered office is situated at 5 West
Wharf, Karachi.

These are the separate financial statements of the Company in which investment in subsidiary is stated at cost less impairment
losses, if any.

2 Summary of Significant Accounting Policies

2.1 Statement of compliance

During the year, the Companies Act 2017 (the Act) has been promulgated, however, Securities and Exchange Commission of
Pakistan vide its circular no. 17 of 2017 dated July 20, 2017 communicated that the Commission has decided that the companies
whose financial year closes on or before June 30, 2017 shall prepare their financial statements in accordance with the provisions
of the repealed Companies Ordinance, 1984. Accordingly, these unconsolidated financial statements have been prepared in
accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such
International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and Islamic
Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under
the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, 1984.
In case requirements differ, the provisions or directives of the repealed Companies Ordinance, 1984 shall prevail.

2.2 Basis of preparation

These unconsolidated financial statements have been prepared under the historical cost convention, except:

a) Certain classes of property, plant and equipment (i.e. freehold land, buildings on freehold and leasehold land and plant and
machinery) have been measured at revalued amounts; and

b) Provision for management staff gratuity and non-management staff gratuity are stated at present value.

The preparation of unconsolidated financial statements in conformity with approved accounting standards requires management
to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and
liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historic
experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognised
prospectively commencing from the period of revision.

Judgments and estimates made by the management that may have a significant risk of material adjustments to the unconsolidated
financial statements in subsequent years are discussed in note 44.

2.3 Property, plant and equipment and depreciation

Property, plant and equipment (except freehold land, buildings on freehold and leasehold land and plant and machinery) are
stated at cost less accumulated depreciation and impairment losses, if any. Freehold land, buildings on freehold and leasehold
land and plant and machinery are stated at revalued amounts less subsequent accumulated depreciation and subsequent
impairment losses, if any. Capital work-in-progress is stated at cost less impairment, if any. Cost of certain property, plant and
equipment comprises historical cost. Such cost includes the cost of replacing parts of the property, plant and equipment and
the cost of borrowings for long-term construction projects, if the recognition criteria is met.

Depreciation charge is based on the straight-line method whereby the cost or revalued amount of an asset is written off to profit
and loss account over its estimated useful life after taking into account residual value, if material. The cost of leasehold land is
depreciated in equal installments over the lease period. Depreciation on additions is charged from the month in which the asset
is available for use and on disposals up to the month of disposal.
ICI Pakistan Limited Annual Report 2016 -17 F 11

The residual value, depreciation method and the useful lives of each part of property, plant and equipment that is significant in
relation to the total cost of the asset are reviewed at each balance sheet date and adjusted, if appropriate.

Maintenance and normal repairs are charged to profit and loss account as and when incurred. Improvements are capitalised
when it is probable that respective future economic benefits will flow to the Company and the cost of the item can be measured
reliably. Assets replaced, if any, are derecognised.

Gains and losses on disposal of assets are taken to the profit and loss account, and the related surplus / deficit on revaluation
of property, plant and equipment is transferred directly to unappropriated profit.

2.4 Intangible assets and amortisation

Intangible assets with a finite useful life, such as certain softwares, licenses (including extraction rights, software licenses, etc.)
and property rights, are capitalised initially at cost and subsequently stated at cost less accumulated amortisation and impairment
losses, if any.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditures are recognised in profit and loss account as incurred.

Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit and loss account on a
straight-line basis over the estimated useful lives of intangible assets. Amortisation methods, useful lives and residual values are
reviewed at each balance sheet date and adjusted, if appropriate.

2.5 Investments

Investments in subsidiary and associates are stated at cost less provision for impairment, if any .

Other investments that are stated at available for sale are measured at fair value plus directly attributable transaction costs. For
investments traded in active market, fair value is determined by reference to quoted market price and the investments for which
a quoted market price is not available, or the fair value cannot be reasonably calculated, are measured at cost, subject to
impairment review at each balance sheet date.

2.6 Stores, spares and consumables

Stores, spares and consumables are stated at the lower of weighted average cost and net realisable value. Net realisable value
is the estimated selling price in the ordinary course of business less net estimated costs to sell, which is generally equivalent to
replacement cost. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon up to the
balance sheet date.

2.7 Stock-in-trade

Stock-in-trade is valued at the lower of weighted average cost and estimated net realisable value.

Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location
and condition. Net realisable value signifies the estimated selling price in the ordinary course of business less net estimated costs of
completion and selling expenses.

Items in transit are valued at cost comprising invoice value plus other charges incurred thereon up to the balance sheet date.

2.8 Trade debts and other receivables

Trade debts and other receivables are recognised at original invoice amount less provision for doubtful debts and other receivables,
if any. A provision for doubtful debts and and other receivables is established when there is objective evidence that the Company
will not be able to collect all amounts due according to the original terms of receivables (Refer note 41.6.1). Bad Debts are written
off when identified.

2.9 Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account, except
to the extent that it relates to items recognised directly in other comprehensive income or below equity, in which case it is
recognised in other comprehensive income or below equity, respectively.
F 12 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017
Current

Provision for current taxation is based on taxable income at the enacted or substantively enacted rates of taxation after taking into
account available tax credits and rebates, if any. The charge for current tax includes adjustments to charge for prior years, if any.

Deferred

Deferred tax is recognised using balance sheet method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using the
enacted or substantively enacted rates of taxation. In this regard, the effects on deferred taxation of the portion of income expected
to be subject to final tax regime is adjusted in accordance with the requirements of Accounting Technical Release – 27 of the
Institute of Chartered Accountants of Pakistan.

The Company recognises a deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future will
be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.

Deferred tax relating to items recognised outside profit and loss account is recognised outside profit and loss account. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Further, the Company recognises deferred tax asset / liability on deficit / surplus on revaluation of property, plant and equipment
which is adjusted against the related deficit / surplus.

2.10 Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand and current and deposit accounts held with banks. Short term finance
facilities availed by the Company, which are payable on demand and form an integral part of the Company’s cash management
are included as part of cash and cash equivalents for the purpose of statement of cash flows.

2.11 Impairment

Financial assets

Financial assets are assessed at each reporting date to determine whether there is objective evidence that they are impaired. A
financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset,
and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired may include default or delinquency by a debtor, indications that a debtor
or issuer will enter bankruptcy.

All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be
specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables
that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk
characteristics.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses
are recognised in profit and loss account and reflected in an allowance account against receivables. Interest on the impaired
asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit and loss account.

Non-financial assets

The carrying amounts of non-financial assets other than inventories and deferred tax asset are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less
costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
ICI Pakistan Limited Annual Report 2016 -17 F 13

discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. For the
purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (“the cash-generating unit, or CGU”).

The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be
impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is
recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are
recognised in profit and loss account.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.12 Surplus on revaluation of fixed assets

The surplus arising on revaluation of fixed assets is credited to the “Surplus on revaluation of property, plant and equipment”
account shown below equity in the balance sheet in accordance with the requirements of section 235 of the repealed Companies
Ordinance, 1984. The said section was amended through the Companies (Amendment) Ordinance, 2002 and accordingly the
Company has adopted the following accounting treatment of depreciation on revalued assets, keeping in view the Securities
and Exchange Commission of Pakistan’s (SECP) SRO 45(1)/2003 dated January 13, 2003:

a) depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation
and depreciation charge for the year is taken to the profit and loss account; and

b) an amount equal to incremental depreciation for the year net of deferred taxation is transferred from “Surplus on revaluation
of property, plant and equipment” account to accumulated profit / loss through Statement of Changes in Equity to record
realization of surplus to the extent of the incremental depreciation charge for the year.

2.13 Staff retirement benefits

The Company’s retirement benefit plans comprise of provident funds, pensions, gratuity schemes and a medical scheme for
eligible retired employees.

Defined benefit plans

The Company operates a funded pension scheme and a funded gratuity scheme for management staff. The pension and gratuity
schemes are salary schemes providing pension and lump sums, respectively. Pension and gratuity schemes for management
staff are invested through two approved trust funds. The Company also operates gratuity scheme for non-management staff
and the pensioners’ medical scheme which are unfunded. The pension and gratuity plans are final salary plans. The pensioner’s
medical plan reimburses actual medical expenses to pensioners as per entitlement. The Company recognises expense in
accordance with IAS 19 “Employee Benefits”.

An actuarial valuation of all defined benefit schemes except eligible retired employees’ medical scheme is conducted every year.
The valuation uses the Projected Unit Credit method. Actuarial gains and losses are recognised in full in the period in which they
occur in other comprehensive income.

All past service costs are recognised at the earlier of when the amendment or curtailment occurs and when the Company has
recognised related restructuring or termination benefits.

Defined contribution plans

The Company operates two registered contributory provident funds for its entire staff and a registered defined contribution
superannuation fund for its management staff, who has either opted for this fund by July 31, 2004 or have joined the Company
after April 30, 2004. In addition to this the Company also provides group insurance to all its employees.
F 14 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017
Compensated absences

The Company recognises the accrual for compensated absences in respect of employees for which these are earned up to the
balance sheet date. The accrual has been recognised on the basis of actuarial valuation.

2.14 Operating leases / Ijarah contracts

Leases, other than those under Ijarah contracts, in which a significant portion of the risks and rewards of ownership are retained
by the lessor, are classified as operating leases. Ijarah contracts are classified as operating leases irrespective of whether significant
portion of the risks and rewards of ownership are retained by lessor. Payments made under operating leases (net of any incentives
received from the lessor) and Ijarah contracts are charged to the profit and loss account on a straight-line basis over the period of
the lease.

2.15 Trade and other payables

Trade and other payables are recognised initially at fair value net of directly attributable cost, if any.

2.16 Borrowings and their cost

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowing costs are recognised as an expense
in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised as part of the cost of that asset.

2.17 Provisions

A provision is recognised in the balance sheet when the Company has a legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can
be made of the amount of obligation. The amount recognised as a provision reflects the best estimate of the expenditure required
to settle the present obligation at the end of the reporting period.

2.18 Financial liabilities

All financial liabilities are initially recognised at fair value plus directly attributable cost, if any, and subsequently measured at
amortised cost.

2.19 Foreign currency translation

Transactions denominated in foreign currencies are translated to Pak Rupees, at the foreign exchange rate prevailing at the date
of transaction. Monetary assets and liabilities in foreign currencies are re-translated into Pak Rupees at the foreign exchange
rates at the balance sheet date. Exchange differences are taken to the profit and loss account.

2.20 Functional and presentation currency

Items included in the unconsolidated financial statements are measured using the currency of the primary economic environment
in which the Company operates. The unconsolidated financial statements are presented in Pak Rupees, which is the Company’s
functional and presentation currency.

2.21 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts,
rebates and government levies.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the
customer. For those products which are often sold with a right of return, accumulated experience is used to estimate and provide
for such returns at the time of sale.
ICI Pakistan Limited Annual Report 2016 -17 F 15

Commission income is recognised on the date of shipment from suppliers.

Profit on short-term deposits is accounted for on a time-apportioned basis using the effective interest rate method.

Dividend income is recognised when the right to receive dividend is established.

Toll manufacturing income is recognised when services are rendered.

2.22 Financial expense and financial income

Financial expenses are recognised using the effective interest rate method and comprise foreign currency losses and markup /
interest expense on borrowings.

Financial income comprises interest income on funds invested. Markup / interest income is recognised as it accrues in profit and
loss account, using the effective interest rate method.

2.23 Dividend

Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved.
However, if these are approved after the reporting period but before the financial statement are authorised for issue, disclosure
is made in the financial statements.

2.24 Segment reporting

Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of
the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Company’s other components. An operating segment’s operating results
are reviewed regularly by the Chief Executive Officer (the CEO) to make decisions about resources to be allocated to the segment
and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax assets, liabilities and related
income and expenditures. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and
equipment.

The business segments are engaged in providing products or services which are subject to risks and rewards which differ from
the risk and rewards of other segments. Segments reported are Polyester, Soda Ash, Life Sciences and Chemicals, which also
reflects the management structure of the Company.

2.25 Derivative financial instruments

The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operational, financing and investment activities. In accordance with its treasury policy, the Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives qualifying for hedge accounting are accounted for accordingly
whereas, derivatives that do not qualify for hedge accounting are accounted for as held for trading instruments. All changes in
the fair value are recognised in the profit and loss account.

2.26 Off-setting

Financial assets and liabilities are offset and the net amount is reported in the unconsolidated financial statements only when
there is, legally enforceable right to set-off the recognised amount and the Company intends either to settle on a net basis, or
to realise the assets and to settle the liabilities simultaneously.
F 16 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

3. Property, plant and equipment

3.1 The following is a statement of property, plant and equipment:

Operating fixed assets - note 3.2 15,240,784 15,878,014


Capital work-in-progress - note 3.7 4,372,739 1,162,320
19,613,523 17,040,334

3.2 The following is a statement of operating fixed assets:


Land Lime beds Buildings Plant and Railway Rolling Furniture Total
Freehold Leasehold on freehold On On machinery sidings stock and and
land freehold leasehold vehicles equipment
land land
Note 3.3 Note 3.3 Note 3.3 & 3.4
As at June 30, 2017

Net carrying value basis

Opening net book value (NBV) 519,718 - 215,405 704,657 1,929,826 12,294,021 - 15,458 198,929 15,878,014
Addition / transfer - note 3.2.1 10,244 - - 7,308 156,690 1,309,963 - 12,976 82,552 1,579,733
Disposal (at NBV) - - - - - - - (455) (39) (494)
Depreciation charge - note 3.5 - - (16,600) (52,425) (161,123) (1,910,836) - (4,275) (71,210) (2,216,469)
Closing Net book value 529,962 - 198,805 659,540 1,925,393 11,693,148 - 23,704 210,232 15,240,784

Gross carrying value basis


Cost / revaluation 529,962 562,166 359,553 2,971,248 3,246,383 29,921,041 297 128,195 757,375 38,476,220
Accumulated depreciation - (562,166) (160,748) (2,311,708) (1,320,990) (18,227,893) (297) (104,491) (547,143) (23,235,436)
Closing net book value 529,962 - 198,805 659,540 1,925,393 11,693,148 - 23,704 210,232 15,240,784

Depreciation rate % per annum - 2 to 4 5 to 25 5 to 25 3 to 33.33 3.33 to 50 3.33 10 to 33.33 10 to 50

As at June 30, 2016

Net carrying value basis


Opening net book value 468,308 - 123,116 727,144 1,144,223 9,889,973 - 22,826 197,997 12,573,587
Addition / transfer - note 3.2.1 22,713 - 92,052 42,856 832,025 3,685,378 - 4,347 65,516 4,744,887
Revaluation 28,697 - 13,842 3,826 82,529 322,014 - - - 450,908
Disposal (at NBV) - - (39) - (6,966) (5,665) - (622) (420) (13,712)
Depreciation charge - note 3.5 - - (13,566) (69,169) (121,985) (1,597,679) - (11,093) (64,164) (1,877,656)
Closing Net book value 519,718 - 215,405 704,657 1,929,826 12,294,021 - 15,458 198,929 15,878,014

Gross carrying value basis


Cost / revaluation 519,718 562,166 359,553 2,963,939 3,088,418 28,630,882 297 127,629 708,058 36,960,660
Accumulated depreciation - (562,166) (144,148) (2,259,282) (1,158,592) (16,336,861) (297) (112,171) (509,129) (21,082,646)
Closing net book value 519,718 - 215,405 704,657 1,929,826 12,294,021 - 15,458 198,929 15,878,014

Depreciation rate % per annum - 2 to 4 5 to 25 5 to 25 3 to 33.33 3.33 to 50 3.33 10 to 33.33 10 to 50


ICI Pakistan Limited Annual Report 2016 -17 F 17

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

3.2.1 Additions to plant and machinery include transfer from capital work-in-progress. It also
includes borrowing cost for various projects determined using capitalization rate of nill
(June 30, 2016: 6.00%) amounting to: - 132,085

3.2.2 Operating fixed assets include the following major spare parts and stand by equipment:

Cost 416,188 399,471


Net book value 137,762 160,745

3.3 Subsequent to revaluations on October 1, 1959, September 30, 2000, December 15, 2006 and December 31, 2011 which had
resulted in a surplus of PKR 14.207 million, PKR 1,569.869 million, PKR 667.967 and PKR 712.431 million respectively as at June
30, 2016 further revaluation was conducted resulting in revaluation surplus net of deferred tax liability of PKR 320.701 million. The
valuation was conducted by an independent valuer. Valuations for plant and machinery and building were based on the estimated
gross replacement cost, depreciated to reflect the residual service potential of the assets taking account of the age, condition and
obsolescence. Land was valued on the basis of fair market value. The fair value of the assets subject to revaluation model fall
under level 2 of fair value hierarchy (i.e. significant observable inputs).

3.4 Plant and machinery including equipment held with Searle Pakistan Limited (toll manufacturer) is as follows:
As at As at
June 30, June 30,
2017 2016

Cost 9,242 8,111

Net book value 4,160 4,168

For the year For the year


ended ended
June 30, 2017 June 30, 2016

3.5 The depreciation charge for the year has been allocated as follows:

Cost of sales 2,154,696 1,820,918


Selling and distribution expenses 29,523 20,862
Administration and general expenses 32,250 35,876
2,216,469 1,877,656

3.5.1 Depreciation charge is inclusive of the incremental depreciation due to revaluation.

3.6 Had there been no revaluation, the net book value of specific classes of operating property, plant and equipment would have
amounted to:
As at As at
June 30, June 30,
2017 2016

Net book value


Freehold land 201,985 191,741
Buildings 2,371,183 2,420,733
Plant and machinery 10,952,699 11,553,572
13,525,867 14,166,046
F 18 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

3.7 Capital work-in-progress comprises of:

Civil works and buildings 715,276 443,249


Plant and machinery 2,920,418 528,556
Miscellaneous equipment 184,854 28,825
Advances to suppliers / contractors 294,290 70,571
Designing, consultancy and engineering fee 257,901 91,119
4,372,739 1,162,320

3.7.1 This includes interest charged in respect of long-term loans obtained for various projects
determined using capitalization rate of 5.57% (June 30, 2016: 5.48%) amounting to: 69,586 5,498

3.7.2 The following is the movement in capital work-in-progress during the year:

Balance at the beginning of the year 1,162,320 1,662,776


Addition during the year 4,703,939 4,183,925
5,866,259 5,846,701
Transferred to operating fixed assets during the year (1,493,520) (4,684,381)
Balance at the end of the year 4,372,739 1,162,320

3.8 Details of operating fixed asset disposal having net book value in excess of PKR 50,000 are as follows:

As at June 30, 2017


Mode of Cost Accumulated Net book Sale Particulars of buyers
sale depreciation value proceeds

Rolling Stock & Vehicles


Loader - Cat 966 F-II Scrap 2,733 2,277 456 45 Ghouri Scrap Dealer
Mandi Bahauddin

As at June 30, 2016

Plant and machinery


65 Ktpa plant, Sodium Scrap 27,813 23,967 3,846 644 Ghouri Scrap Dealer
bicarbonate plant and Mandi Bahauddin
commissioning cost

Building on leasehold land


Infrastructure refurbishment Bidding 14,261 7,545 6,716 1,020 Awan Brothers Karimpura,
Khewra and Ghouri Scrap
Dealer Mandi Bahauddin
Furniture and equipments
HP server for PIII and IBM Scrap 5,824 5,534 290 320 M/s Sh. Auyoub,
Sheikhupura

Rolling stock & vehicles


Fleet car Auction 622 - 622 4,615 Syed Nadeem Raza Ali,
Karachi
ICI Pakistan Limited Annual Report 2016 -17 F 19

Amounts in PKR '000


4 Intangible assets
As at June 30, 2017
Software Licenses Total

Net carrying value basis


Opening net book value (NBV) 6,530 9,930 16,460
Addition / transfer 4,795 5,204 9,999
Amortisation charge - note 4.1 (2,014) (5,172) (7,186)
Closing net book value 9,311 9,962 19,273

Gross carrying amount


Cost 184,202 205,157 389,359
Accumulated amortisation (174,891) (195,195) (370,086)
Closing net book value 9,311 9,962 19,273
Rate of amortisation % per annum 20 20 to 50

As at June 30, 2016

Net carrying value basis


Opening net book value (NBV) 1,980 26,338 28,318
Addition / transfer 6,096 3,628 9,724
Amortisation charge - note 4.1 (1,546) (20,036) (21,582)
Closing net book value 6,530 9,930 16,460

Gross carrying amount


Cost 179,407 200,674 380,081
Accumulated amortisation (172,877) (190,744) (363,621)
Closing net book value 6,530 9,930 16,460
Rate of amortisation % per annum 20 20 to 50

For the year For the year


ended ended
June 30, 2017 June 30, 2016

4.1 The amortisation charge for the year has been allocated as follows:

Cost of sales 1,266 4,491


Selling and distribution expenses 463 2,632
Administration and general expenses 5,457 14,459

7,186 21,582
F 20 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

5. Long-term investments

Unquoted - at cost
Subsidiaries
- ICI Pakistan PowerGen Limited (wholly owned)
7,100,000 ordinary shares (June 30, 2016: 7,100,000) of PKR 100 each - note 5.3 710,000 710,000
Provision for impairment loss - note 5.4 (209,524) (209,524)
500,476 500,476
- Cirin Pharmaceuticals (Private) Limited (wholly owned)
112,000 ordinary shares of PKR 100 each and premium of PKR 8661.61 per share - note 5.1 981,300 -

- NutriCo Morinaga (Private) Limited


5,100,000 oridnary shares of PKR 100 each - note 5.2 510,000 -

Associate
- NutriCo Pakistan (Private) Limited 40% ownership
200,000 ordinary shares of PKR 1,000 each and premium of PKR 3,800 per share 960,000 960,000

Others - at cost
Equity security available-for-sale
- Arabian Sea Country Club Limited
'250,000 ordinary shares (June 30, 2016: 250,000) of PKR 10 each 2,500 2,500

2,954,276 1,462,976

5.1 During the year, the Company acquired 100% voting shares of Cirin Pharmaceuticals (Private)
Limited ("Cirin"). Cirin is a private limited company incorporated in Pakistan, which is involved
in manufacturing and sale of pharmaceutical products. As of the balance sheet date, the value
of the Company's investment on the basis of net assets of Cirin as disclosed in its audited
financial statements was: 150,522 -

5.2 On 6th March 2017, the Company entered into a joint venture with Morinaga Milk Industry
Company Limited ("Morinaga") of Japan and Unibrands (Private) Limited ("Unibrands") to set
up a plant for manufacturing infant/growing up formula. To initiate this project, a new Company
has been incorporated which is a subsidiary of ICI Pakistan Limited in which 51% shareholding
is held by ICI Pakistan Limited. As of the balance sheet date, the value of the Company's
investment on the basis of net assets as disclosed in its audited financial statements was: 994,613 -

5.3 As of the balance sheet date, the value of the Company's investment on the basis of
net assets of ICI Pakistan PowerGen Limited (the Subsidiary) as disclosed in its audited
financial statements for the year ended June 30, 2017: 777,152 831,156

5.4 The Company has reassessed the recoverable amount of the subsidiaries as at the balance sheet date and based on its
assessment no material adjustment is required to the carrying amount stated in the financial statement.

6. Long-term loans

Considered good
Due from executives and employees - note 6.1 370,465 356,330

6.1 Due from executives and employees


Motor car House Total Total
building
Due from executives - note 6.2, 6.3 and 6.4 279,759 66,045 345,804 281,854
Receivable within one year (71,262) (29,321) (100,583) (68,631)
208,497 36,724 245,221 213,223
Due from employees - note 6.3 148,666 177,367
Receivable within one year (23,422) (34,260)
125,244 143,107
370,465 356,330

Outstanding for period:


- less than three years but over one year 297,612 274,688
- more than three years 72,853 81,642
370,465 356,330
ICI Pakistan Limited Annual Report 2016 -17 F 21

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

6.2 Reconciliation of the carrying amount of loans to executives:

Balance at the beginning of the year 281,854 245,006


Disbursements during the year 142,845 124,213
Received during the year (78,895) (87,365)
Balance at the end of the year 345,804 281,854

6.3 Loans for purchase of motor cars and house building are repayable between two to ten years. These loans are interest free
and granted to the employees, including executives of the Company, in accordance with their terms of employment.

6.4 The maximum aggregate amount of loans due from the executives at the end of any month
during the year: 249,520 301,009

7. Long-term deposits and prepayments

Deposits 30,057 28,209


Prepayments 8,570 5,385
38,627 33,594

8. Stores, spares and consumables

Stores - note 8.1 157,336 99,618


Spares - note 8.1 793,771 744,789
Consumables 113,814 115,074
1,064,921 959,481
Provision for slow moving and obsolete stores and spares - note 8.2 (122,285) (147,518)
942,636 811,963

8.1 The above amounts include stores and spares in transit: 129,921 69,357

8.2 Movement of provision for slow moving and obsolete stores and spares is as follows:

Balance at the beginning of the year 147,518 168,547


Charge for the year - note 28 - 4,060
Write-off during the year (25,233) (25,089)
Balance at the end of the year 122,285 147,518

9. Stock-in-trade

Raw and packing material includes in-transit PKR 862.180 million 2,468,016 2,269,497
(June 30, 2016: PKR 814.638 million) - note 9.3
Work-in-process 75,244 140,179
Finished goods include in-transit PKR 6.318 million
(June 30, 2016: PKR Nil) 3,268,224 3,019,011
5,811,484 5,428,687
Provision for slow moving and obsolete stock-in-trade - note 9.1
- Raw material (3,765) (11,381)
- Finished goods (61,072) (120,560)
(64,837) (131,941)
5,746,647 5,296,746
F 22 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

9.1 Movement of provision for slow moving and obsolete stock-in-trade is as follows:

Balance at the beginning of the year 131,941 127,067


Charge for the year - note 28 63,506 22,254
Write-off during the year (130,610) (17,380)
Balance at the end of the year 64,837 131,941

9.2 Stock amounting to PKR 734.965 million (June 30, 2016: PKR 338.822 million) is measured at net realisable value and reversal
amounting to PKR 25.648 million (June 30, 2016: PKR 10.999 million expense) has been realized in cost of sales.

9.3 Raw and packing materials held with various toll manufacturers:

Searle Pakistan Limited 111,841 183,246


Maple Pharmaceutical (Private) Limited 984 2,021
EPLA Laboratories (Private) Limited 7,770 -
Breeze Pharma (Private) Limited 10,140 25,133
Nova Med Pharmaceuticals 11,685 32,000
BioGenics 115 -
Other than above 10,287 -
152,822 242,400

10. Trade debts

Considered good
- Secured 392,527 354,530
- Unsecured 2,663,286 1,579,697
3,055,813 1,934,227
Considered doubtful 82,801 43,955
3,138,614 1,978,182
Provision for:
- Doubtful debts - note 41.4 and 41.6 (82,801) (43,955)
- Discounts payable on sales (508,473) (293,780)
(591,274) (337,735)
2,547,340 1,640,447

10.1 The above balances include amounts due from the following associated undertakings which are neither past due nor impaired:

Secured
ICI Pakistan PowerGen Limited 122 265

Unsecured
Yunus Textile Mills Limited 1,847 179
Lucky Textile Mills Limited 1,861 948
Lucky Foods (Private) Limited 155 -
Lucky Knits (Private) Limited 528 472
Oil & Gas Development Company Limited 14 14
NutriCo Pakistan (Private) Limited - 2,393
Feroze 1888 Mills Limited - 331
4,527 4,602

11. Loans and advances

Considered good
Loans due from:
Executives - note 11.1 100,583 82,097
Employees 23,422 34,260
124,005 116,357
Advances to:
Executives 14,989 10,604
Employees 3,055 411
Contractors and suppliers - note 11.2 301,011 261,572
Others 1,131 2,398
320,186 274,985
444,191 391,342
ICI Pakistan Limited Annual Report 2016 -17 F 23

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

11.1 The maximum aggregate amount of loans due from the executives at the end of any
month during the year: 48,882 68,691

11.2 The above balances inculde advances to related parties amounting to:

Pakistan Cables Limited 20,853 -


Lucky Cement Limited 1,617 -
Cirin Pharmaceuticals (Private) Limited 7,600 -
30,070 -

12. Trade deposits and short-term prepayments

Trade deposits 147,097 37,796


Short-term prepayments 417,288 390,917
564,385 428,713

13. Other receivables

Considered good
Duties, sales tax and octroi refunds due 943,727 474,309
Commission and discounts receivable 42,834 28,046
Due from associate 164,000 -
Receivable from principal - note 13.1 209,114 184,950
Others 155,853 39,378
1,515,528 726,683

Considered doubtful 5,055 1,622


1,520,583 728,305

Provision for doubtful receivables - note 13.2 (5,055) (1,622)


1,515,528 726,683

13.1 This includes receivable from a foreign vendor in relation to margin support guarantee: 128,527 118,528

13.2 Movement of provision for doubtful receivables

Balance at the beginning of the year 1,622 1,622


Charge for the year 3,433 -
Balance at the end of the year 5,055 1,622

14. Cash and bank balances

Cash at banks:
- Short-term deposits - note 14.1 124,350 135,878
- Current accounts 12,592 4,696

Cash in hand 4,806 5,713


141,748 146,287

14.1 Represent security deposits from customers that are placed with various banks at pre-agreed rate maturing at various dates.
These are interest based arrangements. The mark-up percentage on these deposits during the year was ranging from 5.50%
to 6.50% (June 30, 2016: 6.00% to 7.00%) and these term deposits are readily encashable without any penalty.
F 24 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at As at As at
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
(Numbers)

15. Issued, subscribed and paid-up capital

83,734,062 83,734,062 Ordinary shares of PKR 10 each fully paid in cash 837,341 837,341
Ordinary shares of PKR 10 each issued as
fully paid for consideration other than cash under
211,925 211,925 scheme of arrangement for amalgamation (note 15.1) 2,119 2,119
Ordinary shares of PKR 10 each issued as
16,786 16,786 fully paid bonus shares 168 168
Ordinary shares issued pursuant to the
previous scheme as fully paid for consideration of
8,396,277 8,396,277 investment in associate (note 15.2) 83,963 83,963
92,359,050 92,359,050 923,591 923,591

15.1 The process for amalgamation of three companies namely Paintex Limited, ICI Pakistan Manufacturers Limited and Imperial
Chemical Industries Limited resulted in a new company as ICI Pakistan Limited on April 01, 1987.

15.2 With effect from October 01, 2000, the Pure Terephthalic Acid (PTA) business of the Company was demerged under a scheme
of arrangement dated December 12, 2000 approved by the shareholders and sanctioned by the High Court of Sindh.

15.3 As at June 30, 2017, Lucky Holdings Limited together with Gadoon Textile Mills Limited and Lucky Textile Mills Limited held
86.14% (June 30, 2016: 86.67%) shares, while institutions held 5.73% (June 30, 2016: 8.25%) and individuals and others held
the balance of 8.13% (June 30, 2016: 5.08%).
As at As at
June 30, June 30,
2017 2016

16. Capital reserves

Share premium - note 16.1 309,057 309,057


Capital receipts - note 16.2 586 586
309,643 309,643

16.1 Share premium includes the premium amounting to PKR 0.902 million received on shares issued for the Company's Polyester
Plant installation in 1980 and share premium of PKR 464.357 million representing the difference between nominal value of PKR
10 per share of 12,618,391 ordinary shares issued by the Company and the market value of PKR 590.541 million of these shares
corresponding to 25% holding acquired in Lotte Pakistan PTA Limited, an ex-associate, at the date of acquisition i.e. November
2, 2001 and the number of shares that have been issued were determined in accordance with the previous scheme in the ratio
between market value of the shares of two companies based on the mean of the middle market quotation of the Karachi Stock
Exchange now Pakistan Stock Exchange (Limited) over the ten trading days between October 22, 2001 to November 2, 2001.

16.2 Capital receipts represent the amount received from various ICI plc group companies overseas for the purchase of property,
plant and equipment. The remitting companies have no claim to their repayments.

As at As at
June 30, June 30,
2017 2016

17. Surplus on revaluation of property, plant and equipment

Balance at the beginning of the year 829,645 576,458


Revaluation surplus - note 3.2 & 3.3 - 450,908
Deferred tax liability recognised on surplus - note 20 - (130,207)
- 320,701
Adjustment due to change in tax rate - note 20.1 11,611 3,382
Transferred to unappropriated profit in respect of incremental
depreciation during the year - net of deferred tax (97,308) (70,896)
Balance at the end of the year 743,948 829,645
ICI Pakistan Limited Annual Report 2016 -17 F 25

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

18. Provisions for non-management staff gratuity 102,289 90,867

18.1 Staff retirement benefits


2017 2016
Funded Unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total

18.1.1 The amounts recognised in the profit and loss account against
defined benefit schemes are as follows:

Current service cost 13,653 42,796 56,449 2,782 16,554 38,673 55,227 3,389
Interest cost 74,207 47,820 122,027 6,710 85,424 52,368 137,792 7,661
Expected return on plan assets (106,856) (42,640) (149,496) - (123,707) (44,814) (168,521) -
Past service cost / (reversal) - - - - - 1,427 1,427 (1,427)
Net (reversal) / charge for the year (18,996) 47,976 28,980 9,492 (21,729) 47,654 25,925 9,623

Other comprehensive income:

Loss / (gain) on obligation 142,055 22,379 164,434 9,903 54,496 28,629 83,125 1,579
(Gain) on plan assets (60,949) (39,238) (100,187) - (43,712) (22,962) (66,674) -
Net (gain) / loss 81,106 (16,859) 64,247 9,903 10,784 5,667 16,451 1,579

18.1.2 Movement in the net assets / (liability) recognised in the


balance sheet are as follows:

Opening balance 421,273 (100,146) 321,127 (90,867) 410,328 (112,336) 297,992 (87,422)
Net reversal / (charge) - note 18.1.1 18,996 (47,976) (28,980) (9,492) 21,729 (47,654) (25,925) (9,623)
Other comprehensive (income) / loss (81,106) 16,859 (64,247) (9,903) (10,784) (5,667) (16,451) (1,579)
Contributions / payments during the year - 66,528 66,528 7,973 - 65,511 65,511 7,757
Closing balance 359,163 (64,735) 294,428 (102,289) 421,273 (100,146) 321,127 (90,867)

18.1.3 The amounts recognised in the balance sheet are as follows:

Fair value of plan assets - note 18.1.5 1,472,114 624,614 2,096,728 - 1,453,265 555,929 2,009,194 -
Present value of defined benefit obligation - note 18.1.4 (1,112,951) (689,349) (1,802,300) (102,289) (1,031,992) (656,075) (1,688,067) (90,867)
Net asset / (liability) 359,163 (64,735) 294,428 (102,289) 421,273 (100,146) 321,127 (90,867)

The recognized asset / liability of funded gratuity is netted off against recognized asset / liability of funded pension and recorded accordingly.

18.1.4 Movement in the present value of defined benefit obligation:

Opening balance 1,031,992 656,075 1,688,067 90,867 955,651 583,274 1,538,925 87,422
Current service cost 13,653 42,796 56,449 2,782 16,554 38,673 55,227 3,389
Interest cost 74,207 47,820 122,027 6,710 85,424 52,368 137,792 7,661
Benefits paid (148,956) (79,721) (228,677) (7,973) (80,133) (48,296) (128,429) (7,757)
Actuarial loss / (gain) 142,055 22,379 164,434 9,903 54,496 28,629 83,125 1,579
Past service cost / (reversal) - - - - - 1,427 1,427 (1,427)
Closing balance 1,112,951 689,349 1,802,300 102,289 1,031,992 656,075 1,688,067 90,867

18.1.5 Movement in the fair value of plan assets:

Opening balance 1,453,265 555,929 2,009,194 - 1,365,979 470,938 1,836,917 -


Expected return 106,856 42,640 149,496 - 123,707 44,814 168,521 -
Contributions - 66,528 66,528 - - 65,511 65,511 -
Benefits paid (148,956) (79,721) (228,677) - (80,133) (48,296) (128,429) -
Actuarial gain 60,949 39,238 100,187 - 43,712 22,962 66,674 -
Closing balance - note 18.1.7 1,472,114 624,614 2,096,728 - 1,453,265 555,929 2,009,194 -
F 26 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

18.1.6 Historical information June 30


2017 2016 2015 2014 2013

Present value of defined benefit obligation 1,904,589 1,778,934 1,626,347 1,627,301 1,699,987
Fair value of plan assets (2,096,728) (2,009,194) (1,836,917) (1,654,153) (1,655,974)
Net (asset) / liability (192,139) (230,260) (210,570) (26,852) 44,013

18.1.7 Major categories / composition of plan assets are as follows: 2017 2016

Debt instruments 60.69% 72.37%


Equity at market value 32.49% 21.99%
Cash / Others 6.82% 5.63%

Fair value of plan asset Pension Gratuity Pension Gratuity


As at June 30, 2017 As at June 30, 2016
Investment
National savings deposits 41,041 18,655 256,738 17,051
Government bonds 872,860 339,892 852,610 327,732
Mutual funds - equity 72,440 46,150 60,873 38,750
Shares 476,763 204,528 274,215 167,694
Cash 9,010 15,389 8,829 11,590
Benefits due - - - (6,888)
Total 1,472,114 624,614 1,453,265 555,929

Mortality of active employees and pensioners is represented by the LIC (96-98) table. The table has been
rated down three years for mortality of female pensioners and widows.
Actual return on plan assets during the year 351,691 239,346

2017 2016

18.1.8 The principal actuarial assumptions at the reporting date were as follows:

Discount rate 7.25% 7.75%


Future salary increases - Management 5.00% 5.75%
Future salary increases - Non-management 2.75% 3.25%
Future pension increases 2.25% 2.50%

18.1.9 Impact of changes in assumptions on defined benefit scheme is as follows:

Assumption 1% Increase 1 % Decrease


Discount rate (88,708) 103,908
Salary increase 70,404 (64,047)
Pension increase 35,914 (32,424)

As at June As at June
30, 2017 30, 2016
(Unaudited) (Audited)

18.1.10 During the year, the Company contributed in the fund as follows:

Provident fund 88,469 78,419


Defined contribution superannuation fund 76,528 67,207

18.2 Provident fund

Size of the fund (net assets) 1,250,408 1,169,750


Cost of investments made (actual investments made) 1,125,222 1,046,679
Percentage of investments made (cost of investments) 90% 89%
Fair value of investments 1,152,476 1,090,817
ICI Pakistan Limited Annual Report 2016 -17 F 27

Amounts in PKR '000

18.2.1 Break-up of investments of provident fund

Break-up of investments in terms of amount and percentage of the size of the provident fund are as follows:

As at June 30, 2017 As at June 30, 2016


(Unaudited) (Audited)
Investments % of Investments % of
investment investment
as size of as size of
the fund the fund
On fair value
Pakistan Investment Bonds 640,456 56% 559,264 51%
Regular Income Certificates 21,713 2% 19,767 2%
Mutual Funds 57,398 5% 147,454 14%
Shares 432,909 38% 364,332 33%
1,152,476 100% 1,090,817 100%

Investments out of provident fund have been made in accordance with the provisions of section 227 of the repealed Companies Ordinance
1984 and the rules formulated for this purpose.
As at As at
June 30, June 30,
2017 2016

19 Long-term loans 4,909,946 3,652,586

Loans from banking companies / financial institutions:

Interest based arrangement - note 19.1

Long-term finance facility


United Bank Limited (UBL) 1,353,444 1,282,342
Faysal Bank Limited (FBL) 74,717 74,717
MCB Bank Limited 532,170 217,086

Other long-term loan


Allied Bank Limited (ABL) 83,333 416,668
United Bank Limited (UBL) 2,000,000 2,000,000
Habib Bank Limited (HBL) 510,000 -

Shariah compliant

Islamic term finance


Habib Bank Limited (HBL) 1,000,000 -
Meezan Bank Limited (MBL) - 55,556
5,553,664 4,046,369
Current portion shown under current liabilities (643,718) (393,783)
4,909,946 3,652,586

19.1 Terms and conditions of these borrowings are as follows:

Lenders Mark-up / Profit rate Limit Loan duration Grace period


FBL SBP rate + 45bps 250,000 10 Years 2 Yrs
UBL SBP rate + 50bps 1,500,000 10 Years 2 Yrs
MCB SBP rate + 30 bps 1,500,000 10 Years 2 Yrs
HBL 6MK + 5bps 2,500,000 7 Years 2 Yrs
ABL 3MK + 25bps 1,000,000 4 Years 1 Yr
UBL 3MK + 25bps 2,000,000 5 Years 2 Yrs
These loans are secured against the fixed assets of Polyester and Soda Ash Business amounting to PKR 2,500 million and
PKR 7,000 million respectively. Mark-up is payable on quarterly basis.
F 28 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at June 30, 2017 As at June 30, 2016
Opening Reversal Closing Opening Charge / Recognized Closing
(Reversal) in surplus on
revaluation
20 Deferred tax liability - net

Deductible temporary differences


Provisions for retirement benefits,
doubtful debts and others (239,276) (34,442) (273,718) (230,018) (9,258) - (239,276)
Retirement fund provisions (19,491) (18,227) (37,718) (15,421) (4,070) - (19,491)

Taxable temporary differences


Property, plant and equipment - note 20.1 1,689,556 (147,109) 1,542,447 1,426,606 132,743 130,207 1,689,556
1,430,789 (199,778) 1,231,011 1,181,167 119,415 130,207 1,430,789

As at As at
June 30, June 30,
2017 2016

20.1 Charge during the year includes amount adjusted in surplus on revaluation of property,
plant and equipment on account of change in tax rate of: 11,611 3,382

21 Trade and other payables

Trade creditors - note 21.1 2,158,246 1,747,144


Bills payable 3,301,165 2,556,974
Accrued expenses 2,500,967 1,846,717
Technical service fee / royalty - note 21.2 21,640 19,778
Workers' profit participation fund - note 21.3 237,441 188,002
Workers' welfare fund 51,684 169,625
Distributors' security deposits - payable on termination of distributorship - note 21.4 101,657 101,113
Contractors' earnest / retention money 10,572 10,245
Running account with customers - note 21.5 399,743 301,656
Unclaimed dividends 80,568 70,648
Payable for capital expenditure 1,108,733 547,635
Accrual for compensated absences - note 21.6 31,249 31,249
Others 118,359 140,950
10,120,448 7,731,736

21.1 This amount includes payable to ICI Pakistan PowerGen Limited, a related party
on account of purchase of electricity: 404,087 454,082

21.2 This amount includes royalty payable to Lucky Holdings Limited, the Holding Company. 21,640 18,993

21.3 Workers' profit participation fund

Balance at the beginning of the year 188,002 148,200


Allocation for the year - note 29 231,406 184,314
419,408 332,514
Interest on funds utilised in the Company's businesses
at 48.25% (June 30, 2016: 86.25%) per annum - note 30 2,346 3,692

Payment to the fund (184,313) (148,204)


Balance at the end of the year 237,441 188,002
ICI Pakistan Limited Annual Report 2016 -17 F 29

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016

21.4 Interest on security deposits from certain distributors is payable at ranging from 5.50% to 6.50% (June 30, 2016: 6% to 7%)
per annum as specified in the respective agreements.

21.5 Included herein are amounts due to the following associated undertakings:

Fashion Textile Mills (Pvt.) Limited 362 -


Yunus Textile Mills Limited - 106
Lucky Cement Limited - 1,039
362 1,145
21.6 This figure is based on actuarial valuation and estimation.

22 Short-term borrowings and running finance 2,118,446 1,964,433

Short-term borrowings and running finance facility from various banks aggregated to Rs. 7,281 million (June 30, 2016: Rs.
7,281 million) and carry mark-up during the year ranging from relevant KIBOR negative 0.05% to positive 0.5% per annum
with an average mark-up rate of relevant KIBOR + 0.12% on utilized limits (June 30, 2016: relevant KIBOR + 0.10% to 1.00%
per annum with an average mark-up rate of relevant KIBOR + 0.22% on utilized limits). These facilities are secured by
hypothecation charge over the present and future stock-in-trade and book debts of the Company.

22.1 Export refinance 50,000 388,741

The Company has export refinance facility of upto Rs. 1200 million available from Faysal Bank Limited as at June 30, 2017 out
of which Rs. 50 million was utilized (2016: Rs. 388.741 million). The above export refinance facility is secured by first pari
passu hypothecation charge. The export refinance facility carries mark-up at State Bank of Pakistan (SBP) rate (currently 2%)
+ 0.25% per annum (June 30, 2016: SBP rate 3.5% + 0.25% per annum).

22.2 Money Market 550,000 300,000

During the year the Company had obtained a money market loan of PKR 300 million from Standard Chartered Bank Limited
for a term of 3 month at plain KIBOR, and of PKR 250 million from Natioanl Bank of Pakistan for a term of 3 month at relevant
KIBOR minus 5 bps.

22.3 Short-term running finance - secured 1,518,446 1,275,692

23 Contingencies and Commitments

23.1 Claims against the Company not acknowledged as debts are as follows:

Local bodies 1,400 1,100


Others 15,302 28,529
16,702 29,629
F 30 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


23.1.1 Collectorate of customs - classification issue in PCT heading

Customs raised a demand for PKR 51.5 million relating to classification issue of Titanium Di-Oxide during prior years. During
the current year, Company received a positive outcome for its case filed with Customs Appellate Tribunal and the case was
decided in Company’s favor.

Collectorate of customs raised demand of PKR 17.4 million till 2015-16 against the Company on the ground that Company is
classifying its imported product Wannate 8019 in wrong PCT Heading. During the current year also, consignments were
withheld by Customs Appraisement due to classification issue. For clearance of these consignments, Company paid PKR 15.8
million as Security Deposit for getting Provisional clearance till the final decision of Classifcation Committee and Appellate
forums, which is still awaited.

For one other product Wannate PM 2010/ 8221, consignments were again withheld by Customs Intelligence on Classification
issue. Company paid PKR 94 million as Security Deposit for Provisional Clearance of these consignments till final decision.
Classification committee through a Public notice dated 12th June, 2017 gave its view on classification of the product against
the Company. Customs after the issuance of this Public Notice raised further demand relating to period prior to issuance of
Public Notice, amounting to PKR 65 million. Company being dissatisfied with the verdict filed a Suit in Sindh High Court on
certain grounds including that applicability of public notice cannot be done retrospectively. The court has granted a stay in
favor of the Company till the next date of hearing. The Company is confident that it has a strong grounds to defend the case
and is hopeful of positive outcome.

23.2 Tax related contingencies are disclosed in note 44 to these unconsolidated financial statements for income and sales tax
contingencies.

As at As at
June 30, June 30,
2017 2016

23.3 Commitments in respect of capital expenditure including various projects of


the Soda Ash business: 1,848,267 2,193,478

23.4 Commitments for rentals under operating lease / Ijarah contracts in respect of vehicles are as follows:

Year
2016-17 - 64,050
2017-18 72,921 44,247
2018-19 60,110 28,227
2019-20 39,393 6,550
2020-21 18,186 -
190,610 143,074

Payable not later than one year 72,921 64,050


Payable later than one year but not later than five years 117,689 79,024
190,610 143,074
ICI Pakistan Limited Annual Report 2016 -17 F 31

Amounts in PKR ‘000


24. Operating segment results

Polyester Soda Ash Life Sciences Chemicals Company


For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Sales
Afghanistan - - 59,967 34,502 - - 1,247 8,711 61,214 43,213
India - - 584,537 704,327 - - - - 584,537 704,327
United Kingdom - - - - - - - 2,192 - 2,192
- - 644,504 738,829 - - 1,247 10,903 645,751 749,732
Inter-segment - - - - - - 7,214 4,610 7,214 4,610
Local 14,647,604 14,235,639 13,159,554 12,653,113 13,536,431 10,265,352 5,504,214 4,739,851 46,847,803 41,893,955
14,647,604 14,235,639 13,804,058 13,391,942 13,536,431 10,265,352 5,512,675 4,755,364 47,500,768 42,648,297

Commission /
toll income - - - - - - 55,085 45,681 55,085 45,681
Turnover 14,647,604 14,235,639 13,804,058 13,391,942 13,536,431 10,265,352 5,567,760 4,801,045 47,555,853 42,693,978
Sales tax - (414,677) (1,897,987) (1,848,888) (135,821) (141,338) (622,360) (540,998) (2,656,168) (2,945,901)
Commission
and discounts (259,549) (393,753) (865,387) (702,375) (2,247,843) (1,413,689) (155,997) (279,213) (3,528,776) (2,789,030)
(259,549) (808,430) (2,763,374) (2,551,263) (2,383,664) (1,555,027) (778,357) (820,211) (6,184,944) (5,734,931)
Net turnover 14,388,055 13,427,209 11,040,684 10,840,679 11,152,767 8,710,325 4,789,403 3,980,834 41,370,909 36,959,047
Cost of sales
- note 26 (14,251,410) (13,765,271) (7,727,970) (7,432,444) (7,891,599) (6,195,958) (3,734,455) (3,086,848) (33,605,434) (30,480,521)

Gross profit 136,645 (338,062) 3,312,714 3,408,235 3,261,168 2,514,367 1,054,948 893,986 7,765,475 6,478,526

Selling and distribution


expenses - note 27 (242,348) (243,280) (296,027) (310,371) (1,729,708) (1,266,174) (339,031) (298,317) (2,607,114) (2,118,142)

Administration
and general
expenses - note - 28 (332,202) (274,325) (287,018) (241,827) (348,276) (232,148) (147,289) (133,377) (1,114,785) (881,677)

Operating result (437,905) (855,667) 2,729,669 2,856,037 1,183,184 1,016,045 568,628 462,292 4,043,576 3,478,707

24.1 Segment assets


- note 24.5 and 25.3 9,682,810 8,085,224 20,853,429 16,782,250 7,787,519 7,011,907 4,082,046 3,152,394 31,944,363 26,888,899

24.2 Unallocated assets 4,211,498 3,699,131


36,155,861 30,588,030

24.3 Segment liabilities


note 24.5
and 25.4 13,710,932 12,368,868 3,925,255 2,034,908 3,068,721 2,187,208 1,129,713 734,635 11,373,180 9,182,744

24.4 Unallocated liabilities 7,854,833 6,159,113


19,228,013 15,341,857

24.5 Inter unit current account balances of respective businesses have been eliminated from the total.

24.6 Depreciation and


amortization
- note 3.5 and 4.1 791,828 819,631 1,357,068 1,016,718 35,940 29,723 38,819 33,166 2,223,655 1,899,238

24.7 Capital expenditure 253,982 222,744 4,376,082 3,937,224 81,314 47,953 88,773 46,234 4,800,151 4,254,155

24.8 Inter-segment pricing

Transactions among the business segments are recorded at arm's length prices using admissible valuation methods.

24.9 There were no major customer of the Company which formed part of 10% or more of the Company's revenue.
F 32 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000

For the For the


year ended year ended
June 30, 2017 June 30, 2016

25. Reconciliations of reportable segment turnover, cost of sales, assets and liabilities

25.1 Turnover

Total turnover for reportable segments - note 24 47,555,853 42,693,978


Elimination of inter-segment turnover - note 24 (7,214) (4,610)
Total turnover 47,548,639 42,689,368

25.2 Cost of sales

Total cost of sales for reportable segments - note 26 33,605,434 30,480,521


Elimination of inter-segment purchases - note 26 (7,214) (4,610)
Total cost of sales 33,598,220 30,475,911

As at As at
June 30, June 30,
2017 2016

25.3 Assets

Total assets for reportable segments 31,944,363 26,888,899


Taxation recoverable 1,257,222 2,236,155
Long-term investments - note 5 2,954,276 1,462,976
Total assets 36,155,861 30,588,030

25.4 Liabilities

Total liabilities for reportable segments 11,373,180 9,182,744


Short-term borrowing and running finance - note 22 2,118,446 1,964,433
Long-term loan - note 19 5,553,664 4,046,369
Accrued mark-up 102,155 77,663
Unclaimed dividends - note 21 80,568 70,648
Total liabilities 19,228,013 15,341,857
ICI Pakistan Limited Annual Report 2016 -17 F 33

Amounts in PKR '000


26. Cost of sales
Polyester Soda Ash Life Sciences Chemicals Company
For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Raw and packing
materials consumed
Opening stock 644,917 665,385 625,823 405,275 767,844 690,608 219,532 295,456 2,258,116 2,056,724
Purchases
Inter-segment 5,532 4,106 - - 1,682 504 - - 7,214 4,610
Others 11,801,977 10,982,051 2,223,176 2,506,983 2,007,635 2,030,953 2,008,727 1,427,390 18,041,515 16,947,377
11,807,509 10,986,157 2,223,176 2,506,983 2,009,317 2,031,457 2,008,727 1,427,390 18,048,729 16,951,987
12,452,426 11,651,542 2,848,999 2,912,258 2,777,161 2,722,065 2,228,259 1,722,846 20,306,845 19,008,711
Closing stock - note 9 (742,941) (644,917) (645,261) (625,823) (639,875) (767,844) (436,174) (219,532) (2,464,251) (2,258,116)
Raw material
consumed 11,709,485 11,006,625 2,203,738 2,286,435 2,137,286 1,954,221 1,792,085 1,503,314 17,842,594 16,750,595
Salaries, wages
and benefits
- note 26.1 485,944 436,141 808,959 751,389 45,380 25,203 67,764 58,076 1,408,047 1,270,809
Stores and
spares consumed 182,685 188,411 162,273 144,872 (5,645) (691) 12,907 11,304 352,220 343,896
Conversion fee
paid to contract
manufacturers - - - - 385,683 376,652 14,269 9,382 399,952 386,034
Oil, gas and
electricity 1,133,944 1,029,957 2,629,665 2,825,500 17 - 20,864 18,023 3,784,490 3,873,480
Rent, rates
and taxes 1,698 1,649 1,371 1,338 14,605 13,983 41,632 30,062 59,306 47,032
Insurance 15,946 19,194 26,972 27,232 151 34 1,699 1,306 44,768 47,766
Repairs and
maintenance 12,632 11,812 6,105 1,463 3,278 3,281 6,887 5,380 28,902 21,936
Depreciation and
amortisation charge
- note 3.5 and 4.1 779,835 801,217 1,344,567 999,894 8,145 6,051 23,415 18,247 2,155,962 1,825,409
Technical fees - - - - 3,416 3,035 591 2,876 4,007 5,911
Royalty - - - - 4,476 3,605 - - 4,476 3,605
General expenses 199,663 211,454 228,257 188,528 22,176 7,413 40,133 29,684 490,229 437,079
Opening stock of
work-in-process 96,152 72,137 - - 36,743 13,391 7,284 10,506 140,179 96,034
Closing stock of
work-in-process
- note 9 (52,831) (96,152) - - (18,385) (36,743) (4,028) (7,284) (75,244) (140,179)
Cost of goods
manufactured 14,565,153 13,682,445 7,411,907 7,226,651 2,637,326 2,369,435 2,025,502 1,690,876 26,639,888 24,969,407
Opening stock of
finished goods 401,556 484,382 133,957 182,030 1,922,505 1,668,871 440,433 433,725 2,898,451 2,769,008
Finished goods
purchased 18,588 - 270,003 157,720 5,246,319 4,090,211 1,802,843 1,414,880 7,337,753 5,662,811
14,985,297 14,166,827 7,815,867 7,566,401 9,806,150 8,128,517 4,268,778 3,539,481 36,876,092 33,401,226
Closing stock of
finished goods
- note 9 (733,887) (401,556) (87,897) (133,957) (1,852,815) (1,922,505) (532,553) (440,433) (3,207,152) (2,898,451)
Provision for slow
moving and obsolete
stocks - note 28 - - - - (61,736) (10,054) (1,770) (12,200) (63,506) (22,254)
14,251,410 13,765,271 7,727,970 7,432,444 7,891,599 6,195,958 3,734,455 3,086,848 33,605,434 30,480,521

26.1 Staff retirement benefits

Salaries, wages and benefits includes amount in respect of staff retirement benefits: 93,775 89,692
F 34 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


27. Selling and distribution expenses
Polyester Soda Ash Life Sciences Chemicals Company
For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Salaries and benefits
- note 27.1 49,641 44,052 42,233 42,058 779,318 609,675 169,886 142,537 1,041,078 838,322
Repairs and maintenance 205 149 1,036 1,241 5,426 4,783 3,852 2,771 10,519 8,944
Advertising and publicity
expenses 23,420 25,100 28,900 10,902 329,423 207,042 8,901 10,677 390,644 253,721
Rent, rates and taxes 552 527 2,781 3,136 20,704 13,847 1,616 1,363 25,653 18,873
Insurance - - 342 312 15,926 10,887 2,027 3,245 18,295 14,444
Lighting, heating and cooling 134 125 2,214 2,328 5,379 4,482 4,137 4,772 11,864 11,707
Depreciation and amortisation
charge - note 3.5 and 4.1 - - 86 108 21,100 14,403 8,800 8,983 29,986 23,494
Outward freight and
handling 1,180 18,287 88,417 127,031 170,017 106,930 80,514 72,058 340,128 324,306
Travelling expenses 12,321 9,486 3,417 3,806 203,821 167,703 23,369 21,638 242,928 202,633
Postage, telegram,
telephone and telex 1,216 1,578 2,009 1,771 21,756 18,096 3,724 3,651 28,705 25,096
Royalty 143,844 134,272 110,407 108,407 - - - - 254,251 242,679
General expenses 9,835 9,704 14,185 9,271 156,838 108,326 32,205 26,622 213,063 153,923

242,348 243,280 296,027 310,371 1,729,708 1,266,174 339,031 298,317 2,607,114 2,118,142

27.1 Staff retirement benefits

Salaries and benefits includes amount in respect of staff retirement benefits: 59,573 51,830

28. Administration and general expenses

Salaries and benefits


- note 28.1 199,205 169,001 180,905 150,715 147,380 121,191 102,577 85,988 630,067 526,895
Repairs and maintenance 3,738 3,341 4,217 3,889 5,635 5,935 812 763 14,402 13,928
Advertising and publicity
expenses 2,877 1,454 3,259 1,730 1,053 564 855 419 8,044 4,167
Rent, rates and taxes 6,383 6,017 3,113 3,047 2,034 1,747 673 659 12,203 11,470
Insurance 1,022 1,058 1,223 1,265 4,793 4,220 288 399 7,326 6,942
Lighting, heating
and cooling 5,685 6,573 4,137 4,526 10,806 12,654 4,029 4,525 24,657 28,278
Depreciation and
amortisation charge
- note 3.5 and 4.1 11,993 18,414 12,415 16,716 6,695 9,269 6,604 5,936 37,707 50,335
Provision for doubtful
debts - note 41.6 553 548 - - 37,618 6,752 675 2,890 38,846 10,190
Provision for slow
moving and obsolete
stock-in-trade- note 9.1 - - - - 61,736 10,054 1,770 12,200 63,506 22,254
Provision for slow moving
and obsolete stores and
spares - note 8.2 - - - 4,060 - - - - - 4,060
Travelling expenses 8,808 7,834 6,512 5,518 10,638 8,491 3,503 2,318 29,461 24,161
Postage, telegram,
telephone and telex 3,648 3,244 2,833 2,649 4,550 4,100 1,739 1,571 12,770 11,564
General expenses 88,290 56,841 68,404 47,712 55,338 47,171 23,764 15,709 235,796 167,433

332,202 274,325 287,018 241,827 348,276 232,148 147,289 133,377 1,114,785 881,677

28.1 Staff retirement benefits

Salaries and benefits includes amounts in respect of staff retirement benefits: 61,913 64,898
ICI Pakistan Limited Annual Report 2016 -17 F 35

Amounts in PKR '000


For the For the
year ended year ended
June 30, 2017 June 30, 2016

29. Other charges

Auditors' remuneration - note 29.1 5,430 4,932


Donations - note 29.2 20,000 20,000
Workers' profit participation fund - note 21.3 231,406 184,314
Workers' welfare fund 56,696 71,393
Workers' welfare fund - Reversal - note 29.3 (174,638) -
Loss on disposal of operating fixed assets - 2,701
Others 4,934 1,500
143,828 284,840

29.1 Auditors' remuneration

Statutory audit fee 3,031 2,756


Half yearly review and other certifications 1,264 1,271
Out of pocket expenses 1,135 905
5,430 4,932

29.2 Represents provision in respect of donation to ICI Pakistan Foundation (Head office, Karachi). Mr. Asif Jooma, Director of the
Group, Mr. Suhail Aslam Khan, Mr. Arshaduddin Ahmed, Ms. Saima Kamila Khan and Ms. Fathema Zuberi, Executives of the
Company are amongst the Trustees of the Foundation.

29.3 Through the Finance Acts of 2006 and 2008, certain amendments were brought in the Workers’ Welfare Fund Ordinance, 1971
(WWF Ordinance) including the levy of WWF which had been originally calculated at the rate of 2% of the total (taxable) income
of the industrial establishment in a particular year, was amended to charge on higher of total (taxable) income or profit before tax
as per account. During the year, the Honorable Supreme Court of Pakistan through its judgement dated 10 October 2016, in Civil
Appeals No. 1049 to 1055/2011 decided that amendments in WWF Ordinance made through Finance Acts were unconstitutional.
Accordingly, the Company has reversed the excess provision calculated on the basis of profit before tax as per accounts.

30. Finance costs

Mark-up 308,508 260,200


Interest on workers' profit participation fund - note 21.3 2,346 3,692
Discounting charges on receivables 70,388 55,748
Exchange losses 12,935 59,070
Guarantee fee and others 3,902 4,588
398,079 383,298

31. Other income

Income from financial assets

Income from related party


Service fee from related party - note 31.1 1,980 1,980

Income from other financial assets


Profit on short-term and call deposits - note 31.2 198 2,067
2,178 4,047
Income from non-financial assets

Scrap sales 82,084 60,309


Sales from scrap raw materials 1,164 12,754
Gain on disposal of property plant & equipment 4,872 -
Provisions and accruals no longer required written back 5,679 369
Dividend from associate 668,000 458,375
Dividend from subsidiary 125,000 150,000
Sundries 3,724 1,843
892,701 687,697
F 36 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


For the For the
year ended year ended
June 30, 2017 June 30, 2016

31.1 This represents amount charged by the Company for certain management and other services rendered to its wholly owned
subsidiary, ICI Pakistan PowerGen Limited, in accordance with the service agreement.

31.2 These are interest-based arrangements.

32. Taxation

Current 1,268,219 528,213


Deferred (169,940) 126,867
Net tax charged - note 32.1 1,098,279 655,080

32.1 Tax reconciliation

Profit before taxation 4,394,370 3,498,266

Tax @ 31% (June 30, 2016: 32%) 1,362,254 1,119,445


Effect of credit under section 65B (130,996) (355,500)
Effect of change in tax rate on beginning deferred tax liability (36,694) (41,612)
Effect of lower rate of dividend income (162,330) (137,383)
Others 66,045 70,130
Net tax charged 1,098,279 655,080

Average effective tax rate 24.99% 18.73%

33. Basic and diluted earnings per share (EPS)

33.1 Continuing operations

Profit after taxation for the year 3,296,091 2,843,186

Number of shares
Weighted average number of ordinary shares outstanding during the year 92,359,050 92,359,050

PKR
Basic and diluted earnings per share (EPS) 35.69 30.78

34 Cash flows from operating activities

Profit before taxation 4,394,370 3,498,266

Adjustments for:
Depreciation and amortisation - note 3.5 and 4.1 2,223,655 1,899,238
Loss / (gain) on disposal of operating fixed assets - note 29 and 31 (4,872) 2,701
Provision for staff retirement benefit plan - note 18.1.1 28,980 25,925
Provision for non-management staff gratuity and eligible retired employees' medical scheme 29,175 32,450
Interest on short-term bank deposits (198) (2,067)
Dividend from subsidiary (PowerGen) - note 31 (125,000) (150,000)
Dividend from associate - note 31 (668,000) (458,375)
Interest expense 385,144 324,229
Provision for doubtful debts - note 41.6 38,846 10,190
Provision for slow moving and obsolete stock-in-trade - note 9.1 63,506 22,254
Provision for slow moving and obsolete stores and spares - note 8.2 - 4,060
Provisions and accruals no longer required written back - note 31 (5,679) (369)
6,359,927 5,208,502
Movement in:
Working capital - note 34.1 (771,585) (385,950)
Long-term loans (14,133) (31,720)
Long-term deposits and prepayments (5,033) (2,817)
5,569,176 4,788,015
ICI Pakistan Limited Annual Report 2016 -17 F 37

Amounts in PKR '000


For the For the
year ended year ended
June 30, 2017 June 30, 2016

34.1 Movement in working capital

(Increase) / decrease in current assets


Stores, spares and consumables (130,673) (162,441)
Stock-in-trade (513,407) (397,236)
Trade debts (945,739) (219,270)
Loans and advances (47,170) (67,276)
Trade deposits and short-term prepayments (162,371) 6,554
Other receivables (790,117) 184,299
(2,589,477) (655,370)
Increase in current liabilities
Trade and other payables 1,817,892 269,420
(771,585) (385,950)

35 Remuneration of chief executive, directors and executives

The amounts charged in the financial statements for the remuneration, including all benefits, to the chief executive, directors and executives
of the Company were as follows:
Chief Executive Directors Executives Total

For the For the For the For the For the For the For the For the
year year year year year year year year
ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016
Managerial remuneration 52,137 49,844 34,104 32,117 920,399 807,571 1,006,640 889,532
Retirement benefits 8,610 8,197 6,059 5,712 198,946 177,700 213,615 191,609
Group insurance 55 45 55 45 6,847 5,605 6,957 5,695
Rent and house maintenance 1,636 1,096 - - 269,310 235,874 270,946 236,970
Utilities 1,033 844 - - 68,106 59,640 69,139 60,484
Medical expenses 210 85 62 335 33,442 48,165 33,714 48,585
63,681 60,111 40,280 38,209 1,497,050 1,334,555 1,601,011 1,432,875

Number of persons as at the


balance sheet date 1 1 1 1 631 574 633 576

35.1 The directors and certain executives are provided with free use of the Company leased cars in accordance with their entitlement. The chief
executive is provided with free use of Company leased car, certain household equipment and maintenance when needed.

For the For the


year ended year ended
June 30, 2017 June 30, 2016

35.2 Remuneration paid to Chairman during the year: - -

35.3 During the year fee paid to non-executive directors for attending board and other
meetings, which is not part of remuneration amounts to: 3,313 2,813

As at and for As at and for


the year ended the year ended
June 30, 2017 June 30, 2016

35.4 Total number of employees as at the balance sheet date 1,386 1,325

Average number of employees during the year 1,375 1,303


F 38 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


36. Transactions with related parties

The related parties comprise the holding company (Lucky Holdings Limited), the ultimate parent company (Lucky Cement Limited) and
related group companies, local associated company, subsidiary companies, directors of the Company, companies where directors
also hold directorship, key employees (note 35) and staff retirement funds (note 18). Details of transactions with related parties other
than those which have been specifically disclosed elsewhere in these unconsolidated financial statements are as follows:

For the For the


year ended year ended
June 30, 2017 June 30, 2016
Relationship with the company Nature of transaction

Holding Company Dividend 1,170,969 896,952


Royalty 254,251 242,679

Subsidiary Companies:
PowerGen(Pvt.) Ltd. Purchase of electricity 527,052 456,720
Sale of goods and material 221 13,825
Dividend income 125,000 150,000

Cirin Pharmaceuticals (Pvt.) Ltd. Investment in subsidiary 981,300 -

NutriCo Morinaga (Pvt.) Ltd. Investment in subsidiary 510,000 -

Associated companies Purchase of goods, materials and services 118,276 101,833


Sale of goods and materials 1,424,859 1,477,802
Dividend received from associate 668,000 458,375
Reimbursement of expenses 88,272 61,760
Dividend paid to associates 187,988 143,755
Donations paid 20,000 -

Key management personnel Remuneration paid 195,068 182,620


Post employment benefits 31,159 30,850

37. Plant capacity and annual production

- in metric tonnes except Nutraceuticals which is in packs:


For the year ended For the year ended
June 30, 2017 June 30, 2016
Annual Production Annual Production
Name Plate Name Plate
Capacity Capacity

Polyester 122,250 121,929 122,250 118,859


Soda Ash 350,000 342,416 350,000 337,869
Chemicals - note 37.2 - 14,210 - 12,950
Sodium Bicarbonate 40,000 31,660 40,000 29,330
Nutraceuticals - note 37.2 and 37.3 - 3,018,534 - 836,332

37.1 Out of total production of 342,416 metric tonnes soda ash, 28,495 metric tonnes was transferred for production of 31,660
tonnes of Sodium Bicarbonate.

37.2 The capacity of Chemicals and Neutraceuticals is indeterminable because these are multi-product with multiple dosage and
multiple pack size plants.

37.3 Last year includes six month production after commissioning of Nutra plant.

38. Fair value of financial assets and liabilities

The carrying amounts of the financial assets and financial liabilities as at the balance sheet date approximate their fair values.
ICI Pakistan Limited Annual Report 2016 -17 F 39

Amounts in PKR '000


39. Financial risk management

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and other
price risk), credit risk and liquidity risk. The Company's overall risk management policy focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Company's financial performance.

39.1 Risk management framework

The Board of Directors has overall responsibility for establishment and oversight of the Company's risk management framework.
The executive management team is responsible for developing and monitoring the Company’s risk management policies. The
team regularly meets and any changes and compliance issues are reported to the Board of Directors through the audit committee.

Risk management systems are reviewed regularly by the executive management team to reflect changes in market conditions
and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop
a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees compliance by management with the Company’s risk management policies and procedures,
and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

40. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises of interest rate risk, currency risk and other price risk.

40.1 Interest rate risk

Interest rate risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company mitigates its risk against the exposure by focusing on short-term investment and maintaining adequate
bank balances. At the balance sheet date the interest rate profile of the Company's interest-bearing financial instruments were:

Carrying Amount
As at June As at June
30, 2017 30, 2016
Fixed rate instruments
Financial assets - note 14 124,350 135,878
Financial liabilities - note 19 and 21 (1,529,818) (1,675,258)
(1,405,468) (1,539,380)

Variable rate instruments


Financial liabilities - note 19 and 22 (4,691,779) (4,436,656)
(4,691,779) (4,436,656)

Sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, therefore a
change in interest rates at the balance sheet date would not affect profit or loss.

Sensitivity analysis for variable rate instruments

If KIBOR had been 1% higher / lower with all other variables held constant, the impact on the profit before tax for the year would
have been PKR 46.910 million (June 30, 2016: PKR 44.367 million).
F 40 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


40.2 Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates. Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into are
denominated in foreign currencies. The Company is exposed to foreign currency risk on sales and purchases which are entered in a
currency other than Pak Rupees. When the management expects future depreciation of Pak Rupee, the Company enters into forward
foreign exchange contracts in accordance with State Bank of Pakistan instructions and the Company’s treasury policy. The policy
allows the Company to take currency exposure within predefined limits while open exposures are rigorously monitored.

Following is the gross balance sheet exposure classified into separate foreign currencies:

CNY EURO USD GBP JPY


As at June 30, 2017
Other receivables - 990 33,346 - -
- 990 33,346 - -
Trade and other payables (606,417) (158,390) (2,152,362) (10,096) (549)
Gross balance sheet exposure (606,417) (157,400) (2,119,016) (10,096) (549)

As at June 30, 2016


Other receivables 3,583 406 18,944 49 -
3,583 406 18,944 49 -
Trade and other payables - (140,419) (1,801,105) (5,978) -
Gross balance sheet exposure 3,583 (140,013) (1,782,161) (5,929) -

Significant exchange rates applied during the year were as follows:


Average rate Spot rate
For the For the As at As at
year ended year ended June 30, June 30,
June 30, June 30, 2017 2016
2017 2016
PKR per PKR PKR
EURO 114.22 115.73 119.63 116.80
USD 104.81 104.35 104.85 104.83
GBP 132.93 155.15 136.24 141.43
CNY 15.39 16.22 15.47 15.78
JPY 0.96 0.89 0.94 1.02

Sensitivity analysis
Every 1% increase or decrease in exchange rate with all other variables held constant will decrease or increase profit before tax for
the year by PKR 28.935 million (June 30, 2016: PKR 19.245 million). The following table demonstrates the sensitivity to the change
in exchange rates. As at June 30, 2017, if Pak Rupee (PKR) had weakened / strengthened by 1% against other currencies, with all
other variables held constant, the effect on the Company profit before tax at June 30, 2017 and June 30, 2016 would be as follows:

Increase / Effect on Effect on Effect on Effect on Effect on


decrease in Profit Profit Profit Profit Profit
exchange before tax before tax before tax before tax before tax
rates (CNY) (EURO) (USD) (GBP) (JPY)

2017
Pak Rupee +1% 6,064 1,574 21,190 101 5
Pak Rupee -1% (6,064) (1,574) (21,190) (101) (5)

2016
Pak Rupee +1% (36) 1,400 17,822 59 -
Pak Rupee -1% 36 (1,400) (17,822) (59) -
ICI Pakistan Limited Annual Report 2016 -17 F 41

Amounts in PKR '000


41. Credit risk

Credit risk represents the accounting loss that would be recognised at the reporting date if counter-parties failed completely to perform
as contracted. The Company does not have significant exposure to any individual counter-party. To reduce exposure to credit risk the
Company has developed a formal approval process whereby credit limits are applied to its customers. The management also regularly
monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery. To
mitigate the risk, the Company has a system of assigning credit limits to its customers based on evaluation based on customer profile
and payment history. Outstanding customer receivables are regularly monitored. Some customers are also secured, where possible,
by way of inland letters of credit, cash security deposit, bank guarantees and insurance guarantees.

The Company's gross maximum exposure to credit risk at the balance sheet date is as follows:
As at As at
June 30, June 30,
2017 2016

41.1 Financial assets

Long-term investments - note 5 2,453,800 962,500


Long-term loans - note 6 370,465 356,330
Long-term deposits - note 7 30,057 28,209
Trade debts - note 10 2,547,340 1,640,447
Loans and advances - note 11 444,191 391,342
Trade deposits - note 12 147,097 37,796
Other receivables - note 13 571,801 252,374
Bank balances - note 14 136,942 140,574
6,701,693 3,809,572

41.2 The Company has placed its funds with banks which are rated A1+ by PACRA and A-1+ by JCR-VIS

41.3 Financial assets

- Secured 905,041 838,232


- Unsecured 5,796,652 2,971,340
6,701,693 3,809,572

41.4 The ageing of trade debts and loans and advances at the balance sheet date is as follows:

Not past due 2,534,770 1,855,857

Past due but not impaired:


Not more than three months 462,100 160,408

Past due and impaired:


More than three months and not more than six months 36,274 8,805
More than six months and not more than nine months 778 734
More than nine months and not more than one year 20,101 22,545
More than one year 20,309 27,395
539,562 219,887
Provision for:
- Doubtful debts - note 10 (82,801) (43,955)
- Doubtful loans and advances - note 11 - -
(82,801) (43,955)
2,991,531 2,031,789

41.4.1 There were no past due or impaired receivables from related parties.
F 42 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


As at As at
June 30, June 30,
2017 2016
41.5 The maximum exposure to credit risk for past due at the balance sheet date by type of counterparty was:

Wholesale customers 73,749 10,962


Retail customers 465,799 172,969
End-user customers 14 35,956
539,562 219,887
Provision for:
- Doubtful debts - note 10 (82,801) (43,955)
456,761 175,932

41.6 Movement of provision for doubtful debts, loans and advances

Trade debts Loans and Total Total


advances

Balance at the beginning of the year 43,955 - 43,955 40,987


Additional provision - note 28 38,846 - 38,846 10,190
Written off during the year - - - (7,222)
Balance at the end of the year 82,801 - 82,801 43,955

41.6.1 The recommended approach for provision is to assess the top layer (covering 50%) of trade receivables on an individual basis
and apply a dynamic approach to the remainder of receivables. The procedure introduces a company-standard for dynamic
provisioning:

• Provide an impairment loss for 50% of the outstanding receivable when overdue more than 90 days, and
• Provide an impairment loss for 100% when overdue more than 120 days.

41.7 Concentration risk

The sector wise analysis of receivables, comprising trade debts, loans and advances and bank balances are given below:
As at As at
June 30, June 30,
2017 2016

Textile and Chemicals 871,525 475,256


Glass 31,056 63,940
Paper and Board 10,348 32,157
Pharmaceuticals 341,033 235,235
Paints 47,785 36,855
Banks 141,748 146,287
Loans, advances and others 1,772,585 1,232,301
3,216,080 2,222,031
Provision for:
- Doubtful debts - note 10 (82,801) (43,955)
3,133,279 2,178,076

41.8 Other price risk is the risk that the value of future cash flows of the financial instrument will fluctuate because of changes in market
prices such as equity price risk. Equity price risk is the risk arising from uncertainties about future values of investment securities.
As at the balance sheet date, the Company is not materially exposed to other price risk except investment in subsidiary which is
carried at cost against which provision for impairment has been provided in these unconsolidated financial statements.
ICI Pakistan Limited Annual Report 2016 -17 F 43

Amounts in PKR '000


42. Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through
an adequate amount of committed credit facilities. The Company's treasury aims at maintaining flexibility in funding by keeping
committed credit lines available.

The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at
the balance sheet to the maturity date.
Carrying Contractual Less than
amount cash flows one year
As at June 30, 2017

Financial liabilities
Trade creditors - note 21 2,158,246 (2,158,246) (2,158,246)
Bills payable - note 21 3,301,165 (3,301,165) (3,301,165)
Accrued mark-up 102,155 (102,155) (102,155)
Accrued expenses - note 21 2,500,967 (2,500,967) (2,500,967)
Technical service fee / royalty - note 21 21,640 (21,640) (21,640)
Distributors' security deposits - payable on
termination of distributorship - note 21 101,657 (108,773) (108,773)
Contractors' earnest / retention money - note 21 10,572 (10,572) (10,572)
Unclaimed dividends - note 21 80,568 (80,568) (80,568)
Payable for capital expenditure - note 21 1,108,733 (1,108,733) (1,108,733)
Others - note 21 118,359 (118,359) (118,359)
Long-term loans - note 19 5,553,664 (5,553,664) (643,718)
Short-term borrowings - note 22 2,118,446 (2,118,446) (2,118,446)
17,176,172 (17,183,288) (12,273,342)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amount.
As at June 30, 2016

Financial liabilities
Trade creditors - note 21 1,747,144 (1,747,144) (1,747,144)
Bills payable - note 21 2,556,974 (2,556,974) (2,556,974)
Accrued mark-up 77,663 (77,663) (77,663)
Accrued expenses - note 21 1,846,717 (1,846,717) (1,846,717)
Technical service fee / royalty - note 21 19,778 (19,778) (19,778)
Distributors' security deposits - payable on
termination of distributorship - note 21 & 21.5 101,113 (108,191) (108,191)
Contractors' earnest / retention money - note 21 10,245 (10,245) (10,245)
Unclaimed dividends - note 21 70,648 (70,648) (70,648)
Payable for capital expenditure - note 21 547,635 (547,635) (547,635)
Others - note 21 140,950 (140,950) (140,950)
Long-term loan 4,046,369 (4,046,369) (393,783)
Short-term borrowings - note 22 1,964,433 (1,964,433) (1,964,433)
13,129,669 (13,136,747) (9,484,161)
F 44 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR '000


43. Capital risk management

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern so that
it can continue to provide returns for shareholders and benefits for other stakeholders; and to maintain a strong capital base
to support the sustained development of its businesses.

The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of
changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders or issue new shares. The Company also monitors capital using a gearing ratio, which is net
debt, interest bearing loans and borrowings including finance cost thereon, less cash and bank balances. Capital signifies equity
as shown in the balance sheet plus net debt. The gearing ratio as at June 30, 2017 and June 30, 2016 is as follows:

As at As at
June 30, June 30,
2017 2016

Long-term loans - note 19 5,553,664 4,046,369


Short-term borrowings and running finance - note 22 2,118,446 1,964,433
Total debt 7,672,110 6,010,802
Cash and bank balances - note 14 (141,748) (146,287)
Net debt 7,530,362 5,864,515
Share capital 923,591 923,591
Capital reserves 309,643 309,643
Unappropriated profit 14,950,666 13,183,294
Equity 16,183,900 14,416,528
Capital 23,714,262 20,281,043

Gearing ratio 31.75% 28.92%

44. Accounting estimates and judgements

Income and sales tax


The Company takes into account the current income and sales tax law and decisions taken by appellate authorities. Instances
where the Companys's view differs from the view taken by the authorities at the assessment stage and where the Company
considers that its view on items of material nature is in accordance with law, the amounts are shown as contingent liabilities
(unless there is remote possibility of transfer of benefits). The details of the tax matters are as follows:

In the case of assessment year 1998-99, the Appellate Tribunal Inland Revenue (The Tribunal) on September 19, 2008 had set
aside the assessments made by FBR. The re-assessment was finalized by the department on June 29, 2010 in which the issues
pertaining to date of commissioning of PTA’s plant & the tax depreciation claimed thereon, restriction of cost of capitalization of
PTA plant and addition to income in respect of trial production stocks were decided against the Company. The Company had
filed an appeal against the said order before the CIR (Appeals) which was decided on November 24, 2015 in which the issue of
date of commissioning of PTA’s plant & the tax depreciation claimed thereon and the issue of addition to income in respect of
trial production stocks were decided in Company 's favour however the issue of restriction of cost of capitalization of PTA plant
was decided against the Company. The Company and FBR have filed the appeals on respective matters decided against them
in Tribunal the hearing of which is yet to be conducted.

In the case of assessment year 2002-2003, on receipt of notice under section 62 of the Income Tax Ordinance, 1979, the
Company had filed a writ petition in the Supreme Court, after it being dismissed by the Sindh High Court on maintainability,
challenging FBR’s notice which stated that the effective date of PTA’s demerger was August 6, 2001 (falling in assessment year
2002-03) rather than the effective date given in the Scheme of Arrangement as October 1, 2000 (which falls in assessment year
2001-02). The notice had raised certain issues relating to vesting of PTA assets by the Company. On March 18, 2015, the Supreme
Court has passed an interim order stating that this case has nexus with the case of assessment year 2001-02 and hearing will
take place once the High Court decides the case in assessment year 2001-02. The High Court decided the same in favor of the
Company and stated that the assessment for AY 2001-2002 is time barred. The department filed an appeal in the Supreme Court
against the order of the High Court. On March 13, 2017, the Supreme Court dismissed the appeal of the department pertaining
to assessment year 2001-2002 and upheld the directions of the High Court and adjudged the case as being barred by limitation
and thereby restoring the position in the original order whereby unabsorbed depreciation was allowed.
ICI Pakistan Limited Annual Report 2016 -17 F 45

Further, the Supreme Court gave directions to the company vide its order dated March 14, 2017 to file its reply to the notice dated
May 26, 2005 with respect to AY 2002-2003. Thereafter the Company submitted its response to the department in consultation
with its external counsel. On May 15, 2017 the DCIR passed its assessment order disallowing depreciation relating to PTA assets,
Capital Gain on Transfer of PTA Plant, Capital Gain on exchange of Shares, Financial charges on loans Subordinate to Pakistan
PTA, Excess Perquisites, discounts, Interest paid to ICI Japan, Provisions and Write Offs. An appeal with the CIR has been filed
by the company against the said order. This appeal is still pending. Further, the Company filed an appeal in the Sindh High Court
against the said order which has granted stay against the said order.

Depreciation relating to PTA assets pertaining to AY 2001-02 was absorbed against tax payable in AY 2002-03 to 2010. As a result
of order dated May 15, 2017 for the AY 2002-2003 whereby a certain portion of the said depreciation was disallowed, ACIR on
June 15, 2017 issued orders for the Tax Years 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010 whereby the spillover impact
of the disallowed depreciation was taken. This resulted in tax payable by the comapany for the Tax Years 2008, 2009 and 2010.
An appeal with the CIR has been filed by the company against the said order. This appeal is still pending. Further, the Company
filed an appeal in the Sindh High Court against the said order which has granted stay against the said order.

In the case of Tax Years 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010, FBR had made disallowances on the matters
related to provisions charged under various heads, financial charges, gain on disposal of fixed assets, exchange loss, proration
of expenses against capital gains and interest free loans offered to employees. The CIR (Appeals) has allowed all the issues in
Tax Years 2003 to 2010 in Company's favor (except 2 issues in tax year 2003 and 2010) against which appeals have been filed
by FBR in the Tribunal. Out of the 2 issues which were not decided in Company's favor, one relates to disallowance of financial
charges in tax year 2003 which has now been decided in company's favor in the order dated June 15, 2017, whereby with
respect to issue pertaining to tax year 2010, we have filed an appeal in the Tribunal against CIR (Appeals)’s decision.

The Additional Commissioner Inland Revenue (ACIR) through its order dated June 07, 2012 disallowed tax loss on disposal of
fixed assets on the grounds that the same were sold through negotiations and not through auction as required by law. ICI filed
an appeal against the said order with the Commissioner Inland Revenue (CIR), who decided the appeal in company’s favor.
Consequently the ACIR being dissatisfied with the CIR order filed an appeal with the ATIR. ATIR through his order dated December
01, 2016 decided the matter against ICI. ICI had filed an appeal in the High Court against the said order, the hearing of which is
yet to be conducted

Availing the exemption as per clause 103 A, Part 1, 2nd Schedule of Income Tax Ordinance 2001 on inter-corporate dividend
paid to Group Company entitled to Group Relief under section 59 B of the Income Tax Ordinance 2001, ICI disbursed the
dividend without tax deduction to Lucky Holdings for dividends announced on 27th August, 2015 and on 19th February, 2016.
However, Federal Board of Revenue not being satisfied, through an Order dated 2nd September, 2016, has called for the deposit
of tax on such dividends along with penalties and additional tax. The Company filed an appeal against the said order in the High
Court which has granted a stay against the said order. The Company is confident that there is no merit in this claim of FBR

"In course of conducting a sales tax audit for the period July 2012 to June 2013, DCIR of FBR raised certain issues with respect
to exemption and zero-rating / reduced rate benefit available to the Company on its sales. On September 12, 2014 the Company
received an order in which demand of PKR 952 million was raised. An appeal was filed with CIR(A) which was decided against the
Company however directions were given to DCIR to amend the original order if the returns are revised by the Company subject
to approval of FBR itself. The application for revision of return filed by the Company is pending with FBR. The Company being
aggrieved has filed a suit in the Sindh High Court for relief in which the Court has granted ad-interim relief till the next date of hearing
which is yet to take place. The Company is confident that there is no merit in this claim of FBR regarding revenue loss and hence,
considering no probability that the case would be decided against the Company, no provision in respect of this has been made in
these financial statements.

Pension and Gratuity

Certain actuarial assumptions have been adopted as disclosed in note 18 to the unconsolidated financial statements for valuation
of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years
might affect gains and losses in those years.

Property, plant and equipment

The estimates for revalued amounts, if any, of different classes of property, plant and equipment, are based on valuation performed
by external professional valuer and recommendation of technical teams of the Company. The said recommendations also include
estimates with respect to residual values and depreciable lives. Further, the Company reviews the value of the assets for possible
impairment on an annual basis. The future cash flows used in the impairment testing of assets is based on management's best
estimates which may change in future periods. Any change in the estimates in future years might affect the carrying amounts of
the respective items of property, plant and equipment with a corresponding effect on the depreciation charge and impairment.
F 46 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

45. Standards, amendments and interpretations adopted during the year

The accounting policies adopted in the preparation of these unconsolidated financial statements are consistent with those of
the previous financial year except as follows :

45.1 New standards

The Company has adopted the following revised standards and amendments of IFRSs which became effective for the current
year:

IFRS 10 - Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial
Statements: Investment Entities: Applying the Consolidation Exception (Amendment)
IFRS 11 - Joint Arrangements: Accounting for Acquisition of Interest in Joint Operation (Amendment)
IFRS 1 - Presentation of Financial Statements: Disclosure Initiative (Amendment)
IAS 16 - Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of Acceptable Method of Depreciation
and Amortization (Amendment)
IAS 16 - Property, Plant and Equipment IAS 41 Agriculture - Agriculture: Bearer Plants (Amendment)
IAS27 - Separate Financial Statements: Equity Method in Separate 'Financial Statements (Amendment)

Annual improvements to IFRSs 2012-2014 Cycle

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Changes in methods of disposal
IFRS 7 - Financial Instruments: Disclosures - Servicing contracts
IFRS 7 - Financial Instruments: Disclosures - Applicability of the offsetting disclosures to condensed interim financial statements
IAS 19 - Employee Benefits - Discount rate: regional market issue
IAS 34 - Interim Financial Reporting - Disclosure of information 'elsewhere in the interim financial report'

The adoption of the above revised standards, amendments and improvements does not have any material effect on these
financial statements.

Standards, amendments and improvements to approved accounting standards that are not yet effective

The following revised standards, amendments and improvements with respect to the approved accounting standards as
applicable in Pakistan would be effective from the dates mentioned below against the respective standards or interpretations:

Standards or Interpretation Effective date (annual periods


beginning on or after)

IFRS 2 – Classification and Measurement of Share Based Payment Transactions (Amendment) January 01, 2018
IFRS 10 - Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Yet not finalised
Ventures: Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture (Amendment)
IAS 7 - Statement of Cash Flows: Disclosure Initiative (Amendment) January 01, 2017
IAS 12 – Income Taxes – Recognition of Deferred Tax Assets for Unrealized losses (Amendments) January 01, 2017
IFRS 4 - Insurance Contracts: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance January 01, 2018
Contracts – (Amendments)
IFRIC 22 - Foreign Currency Transactions and Advance Consideration January 01, 2018
IFRIC 23 - Uncertainity over Income tax treatment January 01, 2019
The Company expects that the adoption of the above standards and amendments will not have any material impact on the
Company's financial statements in the period of initial application.
ICI Pakistan Limited Annual Report 2016 -17 F 47

Further, the following new standards have been issued by IASB which are yet to be notified by the Securities and Exchange
Commission of Pakistan (SECP) for the purpose of applicability in Pakistan.

Standard IASB effective date (annual


periods beginning on or after)

IFRS 9 – Financial Instruments: Classification and Measurement January 01, 2018


IFRS 14 – Regulatory Deferral Accounts January 01, 2018
IFRS 15 – Revenue from Contracts with Customers January 01, 2018
IFRS 16 – Leases January 01, 2019
IFRS 17 - Insurance Contracts January 01, 2021
The Group expects that above new standards will not have any material impact on the Company's financial statements in the
period of initial application.

46 Post balance sheet events - dividends

The Directors in their meeting held on July 28, 2017 have recommended a final dividend of PKR 10.00 per share (June 30, 2016:
PKR 9.00 per share) in respect of year ended June 30, 2017. This dividend is in addition to interim dividend paid of PKR 8.00 per
share during the current year. The unconsolidated financial statements for the year ended June 30, 2017 do not include the effect
of the final dividend which will be accounted for in the year in which it is approved.

47 Date of authorisation

These financial statements were authorised for issue in the Board of Directors meeting held on July 28, 2017.

48. General

48.1 Corresponding figures have also been rearranged and reclassified, wherever necessary, for better presentation. However, there
has been no material reclassification to report.

48.2 Figures have been rounded off to the nearest thousand rupees except as stated otherwise.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 48 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Unconsolidated Financial Statements


For the year ended June 30, 2017

12 months

January - December

2008 2009 2010


Restated

Balance Sheet
Equity 12,448,126 13,482,796 14,548,093

Revaluation Reserves 962,795 931,846 907,352

Equity and Revaluation Reserve 13,410,921 14,414,642 15,455,445

Non Current Liability 612,954 1,208,117 1,093,190

Current Liability 4,446,810 5,799,898 5,482,037

Total Equity and Liabilities 18,470,685 21,422,657 22,030,672

Non Current Assets 10,435,258 10,297,489 10,152,415

Current Assets 8,035,427 11,125,168 11,878,257

Total Assets 18,470,685 21,422,657 22,030,672

Profit and Loss Account


Turnover 31,921,873 32,399,181 39,532,506

Net turnover 27,798,915 28,429,897 35,129,980

Cost of Sales 22,303,138 22,754,005 28,443,690

Gross profit 5,495,777 5,675,892 6,686,290

Operating Result 3,052,360 3,027,654 3,712,566

Profit before taxation 2,812,778 3,072,506 3,731,516

Profit after taxation 1,862,738 2,044,738 2,428,826

Summary of Cash Flows

Cash generated from / (used in) operations 1,188,392 4,938,310 3,716,187

Net cash generated from / (used in) operating activities 969,809 4,476,231 2,334,428

Net cash used in investing activities (1,780,969) (938,043) (752,830)

Net cash generated from / (used in) financing activities (832,815) (1,041,018) (1,388,027)

Cash and cash equivalents at December 31 / June 30 1,971,081 4,468,251 4,661,822


ICI Pakistan Limited Annual Report 2016 -17 F 49

Amounts in PKR '000


12 months

July - June

2011 2012 2012-13 2013-14 2014-15 2015-16 2016-17


Restated Restated Restated

9,066,723 9,024,890 9,788,989 11,237,427 12,717,080 14,416,528 16,183,900

824,207 740,656 698,536 639,372 576,458 829,645 743,948

9,890,930 9,765,546 10,487,525 11,876,799 13,293,538 15,246,173 16,927,848

1,340,306 1,593,267 3,067,815 3,486,365 2,762,532 5,174,242 6,243,246

9,280,988 9,355,282 7,389,365 7,574,254 10,613,713 10,167,615 12,984,767

20,512,224 20,714,095 20,944,705 22,937,418 26,669,783 30,588,030 36,155,861

9,154,438 10,898,077 11,330,538 12,500,614 15,843,044 18,909,694 22,996,164

11,357,786 9,816,018 9,614,167 10,436,804 10,826,739 11,678,336 13,159,697

20,512,224 20,714,095 20,944,705 22,937,418 26,669,783 30,588,030 36,155,861

38,348,591 37,809,433 39,627,119 42,698,659 42,593,948 42,689,368 47,548,639

35,516,114 34,681,563 36,267,761 38,233,477 37,515,328 36,954,437 41,363,695

30,910,029 30,688,097 32,193,170 33,581,636 31,725,574 30,475,911 33,598,220

4,606,085 3,993,466 4,074,592 4,651,841 5,789,754 6,478,526 7,765,475

2,378,449 1,624,634 1,986,737 2,225,934 3,044,107 3,478,707 4,043,576

2,294,653 1,496,223 1,749,207 1,980,964 2,703,494 3,498,266 4,394,370

1,531,430 973,661 1,158,701 1,702,216 2,125,708 2,843,186 3,296,091

4,127,104 (1,963,689) (164,272) 4,818,897 5,015,304 4,788,015 5,569,176

2,875,020 (3,176,714) (971,364) 3,806,585 3,748,417 3,680,106 4,824,855

(509,814) (2,125,793) (940,727) (2,400,932) (4,372,472) (4,138,316) (4,930,518)

(2,151,436) (796,407) 1,453,483 933,274 (1,554,652) 404,044 (52,889)

4,633,322 (1,465,592) (1,924,200) 414,727 (1,763,980) (1,818,146) (1,976,698)


F 50 ICI Pakistan Limited Annual Report 2016 -17

Pattern of Shareholding
as at June 30, 2017

No. of Shareholders Categories No. of Shares


From To
6227 1 100 209,000
2496 101 500 595,645
581 501 1,000 421,378
575 1001 5,000 1,265,887
96 5001 10,000 681,070
41 10001 15,000 506,032
9 15001 20,000 167,174
13 20001 25,000 299,195
5 25001 30,000 132,159
1 30001 35,000 33,569
4 35001 40,000 150,462
5 40001 45,000 212,587
7 45001 50,000 340,200
2 50001 55,000 105,020
3 55001 60,000 167,518
2 65001 70,000 134,550
1 75001 80,000 77,400
1 80001 85,000 84,700
1 100001 105,000 101,000
4 110001 115,000 447,265
1 115001 120,000 119,687
1 120001 125,000 120,116
2 125001 130,000 251,600
1 140001 145,000 143,350
1 150001 155,000 153,470
1 160001 165,000 162,523
1 175001 180,000 179,750
1 190001 195,000 194,650
1 210001 215,000 210,679
1 275001 280,000 275,116
1 305001 310,000 307,281
1 365001 370,000 369,100
1 450001 455,000 451,900
1 485001 490,000 486,920
1 1015001 1,020,000 1,017,775
1 2225001 2,230,000 2,229,188
1 5075001 5,080,000 5,077,180
1 5980001 5,985,000 5,980,917
1 68495001 68,500,000 68,496,037
10094 92,359,050
ICI Pakistan Limited Annual Report 2016 -17 F 51

Pattern of Shareholding
as at June 30, 2017

S.No. Categories of Shareholders No. of No. of Shares Percentage


Shareholders
1 Directors, Cheif Executive Officer, and their spouse and
minor children 4 532,019 0.58
2 Associated Companies, Undertakings and Related Parties 3 79,554,134 86.14
3 NIT and ICP 0 0 0.00
4 Banks, Development Financial Institutions,
Non Banking Financial Institutions 25 401,298 0.43
5 Insurance Companies 16 2,811,280 3.04
6 Modarabas and Mutual Funds 50 3,674,786 3.98
7 Share holders holding 10% 1 68,496,037 74.16
8 General Public :
a. local 9,773 3,737,341 4.05
b .Foreign 0 0 0.00
9 Others 223 1,648,192 1.78
Total (excluding : shareholders holding 10%) 10,094 92,359,050 100.00
F 52 ICI Pakistan Limited Annual Report 2016 -17

Pattern of Shareholding
as at June 30, 2017

ADDITIONAL INFORMATION
Shareholder’s Category Number of Number of %
Shareholders / Shares Held
folios
i. Associated Companies, Undertaking and Related Parties (name wise details)
GADOON TEXTILE MILLS LIMITED 1 5,980,917 6.48
LUCKY HOLDINGS LIMITED 1 68,496,037 74.16
LUCKY TEXTILE MILLS LIMITED 1 5,077,180 5.50
3 79,554,134 86.14

ii. Mutual Funds (name wise details)


CDC - TRUSTEE ABL ISLAMIC PENSION FUND - EQUITY SUB FUND 1 5,800 0.01
CDC - TRUSTEE ABL PENSION FUND - EQUITY SUB FUND 1 5,900 0.01
CDC - TRUSTEE ABL STOCK FUND 1 369,100 0.40
CDC - TRUSTEE AKD INDEX TRACKER FUND 1 3,038 0.00
CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND 1 275,116 0.30
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 1 210,679 0.23
CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 1 56,700 0.06
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 1 194,650 0.21
CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1 16,850 0.02
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 1 126,100 0.14
CDC - TRUSTEE ALFALAH GHP STOCK FUND 1 25,900 0.03
CDC - TRUSTEE ALFALAH GHP VALUE FUND 1 25,000 0.03
CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND 1 24,900 0.03
CDC - TRUSTEE FAYSAL ASSET ALLOCATION FUND 1 6,500 0.01
CDC - TRUSTEE FAYSAL BALANCED GROWTH FUND 1 10,000 0.01
CDC - TRUSTEE FAYSAL ISLAMIC ASSET ALLOCATION FUND 1 10,600 0.01
CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 1 3,000 0.00
CDC - TRUSTEE HBL IPF EQUITY SUB FUND 1 4,800 0.01
CDC - TRUSTEE HBL MULTI - ASSET FUND 1 8,900 0.01
CDC - TRUSTEE HBL PF EQUITY SUB FUND 1 3,900 0.00
CDC - TRUSTEE LAKSON EQUITY FUND 1 65,150 0.07
CDC - TRUSTEE LAKSON ISLAMIC TACTICAL FUND 1 1,308 0.00
CDC - TRUSTEE LAKSON TACTICAL FUND 1 8,985 0.01
CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 1 110,800 0.12
CDC - TRUSTEE MEEZAN ASSET ALLOCATION FUND 1 55,800 0.06
CDC - TRUSTEE MEEZAN BALANCED FUND 1 120,116 0.13
CDC - TRUSTEE MEEZAN ISLAMIC FUND 1 1,017,775 1.10
CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 1 153,470 0.17
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1 33,569 0.04
CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 1 7,500 0.01
CDC - TRUSTEE PICIC GROWTH FUND 1 101,000 0.11
CDC - TRUSTEE PICIC INVESTMENT FUND 1 43,900 0.05
CDC - TRUSTEE UBL ASSET ALLOCATION FUND 1 25,700 0.03
CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND - EQUITY SUB FUND 1 38,500 0.04
CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 1 179,750 0.19
CDC-TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 1 40,800 0.04
CDC-TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND 1 12,000 0.01
CONFIDENCE MUTUAL FUND LTD 1 7 0.00
DOMINION STOCK FUND LIMITED 1 168 0.00
GOLDEN ARROW SELECTED STOCKS FUND 1 7 0.00
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 1 143,350 0.16
MCBFSL TRUSTEE ABL ISLAMIC DEDICATED STOCK FUND 1 113,500 0.12
SAFEWAY MUTUAL FUND LIMITED 1 256 0.00
SECURITY STOCK FUND LIMITED 1 36 0.00
44 3,660,880 3.96

iii. Directors and their spouse (s) and minor children (name wise details)
MR. ASIF JOOMA 2 506,920 0.55
MR. KHAWAJA IQBAL HASSAN 1 12,500 0.01
MR. KAMAL A CHINOY 1 12,599 0.01
4 532,019 0.58

iv. Executives 13 3,424 0.00

v Public Sector Companies and Corporations 3 2,536,748 2.75

vi Banks, Development Finance Institutions, Non-Banking Finance Institutions,


Insurance Companies, Takaful, Modaraba and Pension Funds 63 815,509 0.88

vii Shareholder Holding five percent or more voting Rights in the Listed Company (name wise details)
GADOON TEXTILE MILLS LIMITED 1 5,980,917 6.48
LUCKY HOLDINGS LIMITED 1 68,496,037 74.16
LUCKY TEXTILE MILLS LIMITED 1 5,077,180 5.50
3 79,554,134 86.14

viii. Others & General Public 9,964 5,256,336 5.69

Total (excluding : shareholders holding 5% ) 10,094 92,359,050 100.00

ix Details of trading in the shares by the Directors, CEO, CFO, Company Secretary and their spouses

During the year,Mr. Kamal A Chinoy, Director purchased 1,000 shares of the Company.The requisite returns in this respect were filed with the regulatory authorities in
addition to informing the Board and Stock Exchange of the said transaction as required under CCG.Other than these, The Director, CEO, CFO, Company Secretary and
their spouses and minor children did not carry out any transaction in the shares of the Company during the financial year.
Notice of 66th Annual General Meeting

Notice is hereby given that the Sixty-Sixth Annual General Meeting of ICI Pakistan Limited will be held on Tuesday,
September 26, 2017 , at 10:30 a.m. at ICI House, 5 West Wharf, Karachi, to transact the following business;

1. To receive, consider and adopt the accounts of the Company for the year ended June 30, 2017, the report of the
Auditors thereon and the report of the Directors.

2. To declare and approve Final Cash dividend @ 100% i.e. Rs. 10/- per ordinary share of Rs.10/- each for the year
ended June 30, 2017, as recommended by the Directors, payable to the Members whose names appear in the
Register of the Members as at Tuesday, September 19, 2017.

3. To appoint the Auditors of the Company and to fix their remuneration.

By Order of the Board

September 05, 2017 Saima Kamila Khan


Karachi Company Secretary

Notes:
1. Share Transfer Books of the Company will remain closed A. For Attending the Meeting:
from September 20, 2017 to September 26, 2017(both days
inclusive). Transfers received in order at the office of our (i) In case of individuals, the account holder or sub-account
Shares Registrar, FAMCO Associates (Pvt) Limited, 8-F, holder and/or the person whose securities are in group
Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi, by the close account and their registration details are uploaded as per
of business on Tuesday, September 19, 2017, will be the Regulations, shall authenticate his/her identity by
considered in time, to entitle the transferees to the Final Cash showing his/her original CNIC/SNIC or original passport
dividend and to attend Annual General Meeting. at the time of attending the meeting.

2. All Members are entitled to attend and vote at the Meeting. (ii) In case of corporate entity, the Board of Directors’
A Member entitled to attend and vote at the Meeting is entitled resolution/power of attorney with specimen signature of
to appoint a proxy to attend, speak and vote for him/her. A the nominee shall be produced (unless it has been
proxy must be a Member of the Company. provided earlier) at the time of the Meeting.

3. An instrument of proxy applicable for the Meeting is being B. For Appointing Proxies:
provided with the notice sent to Members. Further copies of
the instrument of proxy may be obtained from the Registered (i) In case of individuals, the account holder or sub-account
Office of the Company during normal office hours. Proxy form holder and/or the person whose securities are in group
may also be downloaded from the Company’s website: account and their registration details are uploaded as per
www.ici.com.pk. the Regulations, shall submit the proxy form as per the
above requirement.
4. An instrument of proxy and the power of attorney or other
authority (if any) under which it is signed, or a notarially certified (ii) The proxy form shall be witnessed by two persons whose
copy of such power or authority, must, to be valid, be names, addresses and CNIC/SNIC numbers shall be
deposited at the Registered Office of the Company not less mentioned on the form.
than 48 hours before the time of the Meeting.
(iii) Attested copies of CNIC/SNIC or the passport of the
5. Members are requested to submit a copy of their beneficial owners and the proxy shall be furnished with
Computerized National Identity Card/Smart National Identity the proxy form.
Card (CNIC/SNIC), if not already provided and notify
immediately changes, if any, in their registered address to (iv) The proxy shall produce his original CNIC/SNIC or original
our Shares Registrar, FAMCO Associates (Pvt) Ltd. passport at the time of the Meeting.

6. CDC Account Holders will further have to follow the under (v) In case of a corporate entity, the Board of Directors’
mentioned guidelines as laid down in Circular 1 dated January resolution/power of attorney with specimen signature
26, 2000, issued by the Securities and Exchange Commission shall be submitted (unless it has been provided earlier)
of Pakistan (SECP). along with proxy form to the Company.
Notice of 66th Annual General Meeting

Circulation of Annual Audited Accounts via Email/CD/USB/DVD or Any Other Media

Pursuant to the directions given by the Securities and Exchange Commission of Pakistan through its SRO 787(1)/2014 dated
September 8, 2014 and SRO 470(1)/2016 dated May 31, 2016 that have allowed the companies to circulate its Annual Audited
Accounts (i.e. Annual Balance Sheet and Profit and Loss Accounts, Statements of Comprehensive Income, Cash Flow Statement,
Notes to the Financial Statements, Auditor’s and Director’s Report) to its members through Email/CD/DVD/USB/ or any other Electronic
Media at their registered Addresses.

Shareholders who wish to receive the hardcopy of Financial Statements shall have to fill the attached standard request form (also
available on the company’s website www.ici.com.pk) and send us to the Company address.

Request for Video Conference Facility

If the Company receives a request from member(s) holding an aggregate ten percent (10%) or more shareholding residing at another city,
such member(s) may request a video conferencing facility for the purposes of participating in the meeting at such a location by sending
a request to the Company at least 10 (ten) days prior to the date of meeting, subject to the availability of a video conferencing facility in
that city. To avail such facility, please submit the following form with the requisite information at the registered office of the Company.

I/we _______________of _________being a member of ICI Pakistan Limited, holding ______ordinary shares as per register Folio
/ CDC Account No. _____________hereby opt for video conference facility at ________________.

_________________ _______________________
Name and signature Date

The Company will intimate members regarding venue of video conference facility at least 7 days before the date of General Meeting
along with complete information necessary to enable them to access such facility.

Submission of CNIC/SNIC/NTN (Mandatory)

Pursuant to the directives of the SECP, CNIC/SNIC or NTN (in case of corporate entities) numbers of shareholders are MANDATORILY
required to be mentioned on dividend warrants. Shareholders are therefore, requested to submit a copy of their valid CNIC/SNIC (if
not already provided) to the Company’s Share Registrar, FAMCO Associates (Pvt.) Ltd. 8-F, Block-6, P.E.C.H.S., Shahra-e-Faisal,
Karachi. In the absence of a member’s valid CNIC/SNIC, the Company will be constrained to withhold dispatch of dividend warrants
to such members.

Dividend Mandate (Mandatory)

Pursuant to the requirement of Section 242 of the New Companies Act, 2017, shareholders are MANDATORILY required to provide
their bank account detail to receive their cash dividend directly in to their bank accounts instead of receiving it through dividend
warrants. In this regard and in pursuance of the directives of the SECP vide Circular No. 18 of 2017 dated August 01, 2017,
shareholders are requested to submit their written request (if not already provided) to the Company’s Share Registrar, giving particulars
of their bank account detail. In the absence of a member’s valid bank account detail by October 31, 2017, the Company will be
constrained to withhold dispatch of dividend warrants to such members.

Revised Treatment of Withholding Tax

Dividend income on shares is liable to deduction of withholding tax under Section 150 of the Income Tax Ordinance, 2001 and
pursuant to Finance Act 2017, effective July 1, 2017, a new criteria for withholding of tax has been introduced by Federal Board of
Revenue (“FBR”). According to the revised criteria, tax is to be withheld based on ‘Filer’ and ‘Non-Filer’ status of shareholders @
15% and 20% respectively where ‘Filer’ means a person whose name appears on the Active Taxpayers List available at e-portal of
FBR (http://www.fbr.gov.pk/) or a holder of “Taxpayer’s Card” and ‘Non-Filer’ means a person who is not a filer.

Furthermore, according to recent clarification provided by the FBR; in case a Folio/CDS Account is jointly held, each joint-holder is
to be treated separately as Filer or Non-Filer. In terms of the said clarification; tax of each joint-holder has been deducted on the
gross dividend amount determined by bifurcating the shareholding of each joint-holder on equal proportions, except where shareholding
proportion of joint-holder(s) is pre-defined as per the records of the Company’s Share Registrar and thus tax rates are applied in line
with respective proportions.

Those shareholders who are holding Folio/CDS jointly; are requested to notify (in writing) any change in their shareholding proportions
to Company’s Share Registrar (in case of physical shareholding) or their Participants/CDC Investor Account Services so that their
revised shareholding proportions are considered by the Company in all prospective dividend payouts of the Company, if any.

Exemption from Deduction of Income Tax / Zakat

Members seeking exemption from deduction of income tax or are eligible for deduction at a reduced rate, are requested to submit
a valid tax exemption certificate or necessary documentary evidence as the case may be. Members desiring non-deduction of zakat
are also requested to submit a valid declaration for non-deduction of zakat.
Form of Proxy
66th Annual General Meeting

I / We

of

being member(s) of ICI Pakistan Limited holding

ordinary shares hereby appoint

of or failing him / her

of who is / are also member(s) of ICI Pakistan Limited as my/our proxy


in my / our absence to attend and vote for me / us and on my / our behalf at the Sixty- Sixth Annual General
Meeting of the Company to be held on September 26, 2017, and at any adjournment thereof.

As witness my / our hand / seal this day of 2017

Signed by the said

in the presence of 1.

2.

Folio / CDC Account No. Signature

This signature should


agree with the
specimen registered
with the Company.

Important:

1. This Proxy Form, duly completed and signed, must be received at the Registered Office of the Company, ICI House, 5 West
Wharf, Karachi, not less than 48 hours before the time of holding the meeting.

2. No person shall act as proxy unless he himself is a member of the Company, except that a corporation may appoint a person
who is not a member.

3. If a member appoints more than one proxy and more than one instruments of proxy are deposited by a member with the
Company, all such instruments of proxy shall be rendered invalid.

For CDC Account Holders / Corporate Entities:

In addition to the above the following requirements have to be met:

i) The proxy form shall be witnessed by two persons whose names, addresses and CNIC / SNIC (Computerized National
Identity Card / Smart National Identity Card) numbers shall be mentioned on the form.

ii) Attested copies of CNIC / SNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form.

iii) The proxy shall produce his original CNIC / SNIC or original passport at the time of the meeting.

iv) In case of corporate entity, the Board of Directors resolution / power of attorney with specimen signature shall be submitted
(unless it has been provided earlier) along with proxy form to the Company.
Affix
Correct
Postage

The Company Secretary


ICI Pakistan Limited
ICI House
5 West Wharf
Karachi-74000
ICI Pakistan Limited
and its Subsidiary Companies
Consolidated Financial Statements
F 60 ICI Pakistan Limited Annual Report 2016 -17

Report of the Directors


for the year Ended June 30, 2017

The Directors are pleased to present their report together with the audited Group results of ICI Pakistan Limited
for the year ended June 30, 2017. The ICI Pakistan Group comprises of ICI Pakistan Limited, ICI Pakistan
PowerGen Limited (PowerGen), and Cirin Pharmaceuticals (Private) Limited (Cirin) and NutriCo Morinaga (Private)
Limited as its subsidiaries.

The Directors’ Report, which provides a commentary on the performance of ICI Pakistan Limited for the year
ended June 30, 2017, has been presented separately.

Net turnover of PowerGen for the year ended June 30, 2017 stood at PKR 450 million, being 16% higher as
compared to last year due to an increase in electricity units sold to the Polyester Business by 4% and a rebound
of furnace oil price by 39%. However, operating profit dipped by 19% (PKR 73 million versus PKR 91 million)
on account of higher repair and maintenance cost.

Cirin completed its first six months of operations as a wholly owned subsidiary of ICI Pakistan Limited by posting
a net turnover of PKR 408 million. During the post acquisition period, operating profits of Cirin were PKR 67
million.

Hy-Cortisone and Stanem were the major contributors to the performance. The Hattar Plant operated efficiently
and as per plan during the post acquisition period. As institutional sales remained strong, the Business shifted
its focus towards retails sales which are expected to open up new avenues. Cirin launched its first product
post-acquisition, under the brand name Sovir (Sofosbuvir); a systemic antiviral for the treatment of Hepatitis
C. This is in line with the Business’s focus on building a sustainable retail prescription business going forward
through restructuring and building up of the capacity of its sales force. The Company has also undertaken an
organisational review with plans to optimise operations further.

Going forward, Cirin will also be exploring further export opportunities in the next financial year. The major focus
will be to capitalise on the manufacturing capacity of the Business. Alongside this, the intent will also be to
leverage the sales network and marketing capabilities of ICI Pakistan Limited to broaden the customer base
for existing products, and to further enhance its product portfolios.

NutriCo Morinaga (Private) Limited is pursuing to set up a state-of-the-art manufacturing facility to manufacture
Morinaga Infant formula along with its distribution and marketing network, as per plan. This project is progressing
in a newly incorporated subsidiary namely NutriCo Morinaga (Private) Limited in which ICI Pakistan Limited has
51% shareholding with remaining shareholding being equally held by Morinaga Milk Industry Company Limited
of Japan and UniBrands (Private) Limited.

On a consolidated basis (including the result of the Company’s subsidiaries, ICI Pakistan PowerGen Limited,
Cirin Pharmaceuticals (Private) Limited and NutriCo Morinaga (Private) Limited Profit after tax (PAT) for the year
at PKR 3,280 million or PKR 35.54 EPS is 20% higher than the SPLY. During the year, the Company recognised
PKR 671 million as share of profit from NutriCo Pakistan (Private) Limited.

Muhammad Sohail Tabba Asif Jooma


Chairman / Director Chief Executive

Dated: July 28, 2017

Karachi
ICI Pakistan Limited Annual Report 2016 -17 F 61

Auditors’ Report to the Members


We have audited the annexed consolidated financial statements comprising consolidated balance sheet of ICI Pakistan
Limited (the Holding Company) and its subsidiary companies namely ICI Pakistan PowerGen Limited, NutriCo
Morinaga (Private) Limited and Cirin Pharmaceuticals (Private) Limited (together referred to as Group) as at 30
June 2017 and the related consolidated profit and loss account, consolidated statement of comprehensive income,
consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part
thereof, for the year then ended. We have also expressed separate opinions on the financial statements of the Holding
Company and its subsidiary companies. These financial statements are the responsibility of the Holding Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.

Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests
of accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the consolidated financial statements present fairly the financial position of the Holding Company and its
subsidiary companies as at 30 June 2017 and the results of their operations for the year then ended.

Date: July 28, 2017 EY Ford Rhodes


Chartered Accountants
Karachi Shariq Ali Zaidi
F 62 ICI Pakistan Limited Annual Report 2016 -17

Consolidated Balance Sheet


As at June 30, 2017

Amounts in PKR ’000

Note June 30, June 30,


2017 2016

ASSETS

Non-current assets
Property, plant and equipment 4 19,958,615 17,164,769
Intangible assets 5 783,356 16,460
20,741,971 17,181,229

Long-term investment 6 966,536 963,667


Long-term loans 7 382,421 357,637
Long-term deposits and prepayments 8 38,627 33,594
1,387,584 1,354,898
22,129,555 18,536,127
Current assets
Stores, spares and consumables 9 1,011,381 861,544
Stock-in-trade 10 5,913,900 5,317,357
Trade debts 11 2,589,878 1,640,067
Loans and advances 12 441,985 392,362
Trade deposits and short-term prepayments 13 577,426 430,649
Other receivables 14 1,617,870 804,400
Taxation - net 1,253,468 2,234,248
Cash and bank balances 15 1,266,464 258,962
14,672,372 11,939,589

Total assets 36,801,927 30,475,716


ICI Pakistan Limited Annual Report 2016 -17 F 63

Amounts in PKR ’000

Note June 30, June 30,


2017 2016

EQUITY AND LIABILITIES

Share capital and reserves


Authorised capital
1,500,000,000 (June 30, 2016: 1,500,000,000) ordinary shares of PKR 10 each 15,000,000 15,000,000

Issued, subscribed and paid-up capital 16 923,591 923,591


Capital reserves 17 309,643 309,643
Unappropriated profit 15,102,390 13,341,517
Attributable to the equity holders of the holding company 16,335,624 14,574,751
Non-controlling interests 487,360 -
Total equity 16,822,984 14,574,751

Surplus on revaluation of property, plant and equipment 18 902,788 995,330

Non-current liabilities

Provisions for non-management staff gratuity 19 115,030 90,867


Long-term loans 20 4,919,478 3,652,586
Deferred tax liability - net 21 1,225,082 1,430,789
Liabilities subject to finance lease 22 799 -
6,260,389 5,174,242
Current liabilities
Trade and other payables 23 9,933,712 7,322,763
Accrued mark-up 103,473 77,663
Short-term borrowings and running finance 24 2,128,905 1,937,184
Current portion of long-term loans 20 647,667 393,783
Current portion of liabilities subject to finance lease 22 2,009 -
12,815,766 9,731,393

Total equity and liabilities 36,801,927 30,475,716

Contingencies and commitments 25

The annexed notes 1 to 50 form an integral part of these consolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 64 ICI Pakistan Limited Annual Report 2016 -17

Consolidated Profit and Loss Account


For the year ended June 30, 2017

Amounts in PKR ’000

For the For the


year ended year ended
Note June 30, 2017 June 30, 2016

Turnover 27.1 48,274,029 42,755,505


Sales tax, commission and discounts 26 (6,502,811) (5,801,068)
Net turnover 41,771,218 36,954,437
Cost of sales 27.2 (33,755,438) (30,382,757)
Gross profit 8,015,780 6,571,680
Selling and distribution expenses 29 (2,688,234) (2,118,142)
Administration and general expenses 30 (1,141,126) (882,030)
Operating result 4,186,420 3,571,508
Other charges 31 (174,168) (291,692)
Finance costs 32 (403,206) (384,245)
(577,374) (675,937)
Other income 33 115,040 83,919
Share of profit from an associate 6 670,869 407,318
Profit before taxation 4,394,955 3,386,808
Taxation 34 (1,114,848) (656,987)
Profit after taxation 3,280,107 2,729,821

Attributable to:
Owners of the Holding Company 3,282,747 2,729,821
Non-controlling interests (2,640) -
3,280,107 2,729,821

Basic and diluted earnings per share (PKR) 35 35.54 29.56

The annexed notes 1 to 50 form an integral part of these consolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
ICI Pakistan Limited Annual Report 2016 -17 F 65

Consolidated Statement of Comprehensive Income


For the year ended June 30, 2017

Amounts in PKR ’000

For the For the


year ended year ended
June 30, 2017 June 30, 2016

Profit for the year 3,280,107 2,729,821


Items to be reclassified to profit or loss in subsequent periods:
Loss on hedge during the year - (2,285)
Income tax relating to hedging reserve - 731
- (1,554)
Adjustments for amounts transferred to initial carrying amounts of
hedged item - capital work-in-progress - 1,554
- -
Items not to be reclassified to profit or loss in subsequent periods:
Actuarial loss on defined benefit plans (74,151) (18,030)
Income tax effect 18,227 4,070
(55,924) (13,960)

Total comprehensive income for the year 3,224,183 2,715,861

Attributable to:
Owners of the Holding Company 3,226,823 2,715,861
Non-Controlling interests (2,640) -
3,224,183 2,715,861

The annexed notes 1 to 50 form an integral part of these consolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 66 ICI Pakistan Limited Annual Report 2016 -17

Consolidated Cash Flow Statement


For the year ended June 30, 2017

Amounts in PKR ’000

For the For the


year ended year ended
June 30, 2017 June 30, 2016

Cash generated from operations - note 36 5,944,957 5,028,366

Payments for :
Staff retirement benefit plans - note 19.1.2 (66,685) (65,683)
Non-management staff gratuity and eligible retired employees' medical scheme (30,000) (29,677)
Taxation (309,938) (709,498)
Interest (364,852) (303,234)
Net cash generated from operating activities 5,173,482 3,920,274

Cash flows from investing activities

Capital expenditure (4,294,344) (4,525,879)


Proceeds from disposal of operating fixed assets 9,789 11,010
Interest received on bank deposits 16,029 6,754
Investment in Subsidiary / Associate (981,300) (240,000)
Dividend received 504,000 458,375
Net cash used in investing activities (4,745,826) (4,289,740)

Cash flows from financing activities

Issuance of shares to non-controlling interests 490,000 -


Long-term loans obtained 1,896,186 2,552,427
Long-term loans repaid (391,692) (955,556)
Payment against finance lease liability (1,358) -
Dividends paid (1,560,184) (1,192,827)
Net cash generated from financing activities 432,952 404,044

Net increase in cash and cash equivalents 860,608 34,578


Cash and cash equivalents at the beginning of the year (1,678,222) (1,712,800)
Cash and cash equivalents acquired through business combination (44,827) -
Cash and cash equivalents at the end of the year (862,441) (1,678,222)

Cash and cash equivalents at the end of the year comprise of:
Cash and bank balances - note 15 1,266,464 258,962
Short-term borrowings and running finance - note 24 (2,128,905) (1,937,184)
(862,441) (1,678,222)

The annexed notes 1 to 50 form an integral part of these consolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
ICI Pakistan Limited Annual Report 2016 -17 F 67

Consolidated Statement of Changes in Equity


For the year ended June 30, 2017

Amounts in PKR ’000

Issued, Capital Unappropriated Total Non- Total


subscribed reserves profit reserves controlling equity
and paid-up interests
capital

As at July 01, 2015 923,591 309,643 11,755,187 12,064,830 - 12,988,421


Final dividend for the year ended
June 30, 2015 @ PKR 6.50 per share - - (600,337) (600,337) - (600,337)
Interim dividend for the year ended
June 30, 2016 @ PKR 6.50 per share - - (600,337) (600,337) - (600,337)
- - (1,200,674) (1,200,674) - (1,200,674)

Profit for the year - - 2,729,821 2,729,821 - 2,729,821


Other comprehensive income
for the year, net of tax - - (13,960) (13,960) - (13,960)
Total comprehensive income - - 2,715,861 2,715,861 - 2,715,861

Transfer from surplus on revaluation


of property, plant and equipment
- incremental depreciation for the year
- net of deferred tax - note 18 - - 71,143 71,143 - 71,143
- - 71,143 71,143 - 71,143

As at June 30, 2016 923,591 309,643 13,341,517 13,651,160 - 14,574,751


Final dividend for the year ended
June 30, 2016 @ PKR 9.00 per share - - (831,231) (831,231) - (831,231)
Interim dividend for the year ended
June 30, 2017 @ PKR 8.00 per share - - (738,872) (738,872) - (738,872)
- - (1,570,103) (1,570,103) - (1,570,103)

Shares issued to non-controlling interests - - - - 490,000 490,000


Loss attributable to non-controlling
interest for the year - - - - (2,640) (2,640)
- - - - 487,360 487,360

Profit for the year - - 3,282,747 3,282,747 - 3,282,747


Other comprehensive income for
the year, net of tax - - (55,924) (55,924) - (55,924)
Total comprehensive income - - 3,226,823 3,226,823 - 3,226,823

Transfer from surplus on revaluation


of property, plant and equipment
- incremental depreciation for the year
- net of deferred tax - note 18 - - 104,153 104,153 - 104,153
- - 104,153 104,153 - 104,153

As at June 30, 2017 923,591 309,643 15,102,390 15,412,033 487,360 16,822,984

The annexed notes 1 to 50 form an integral part of these consolidated financial statements.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 68 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

1 Status and Nature of Business

The Group consists of:

- ICI Pakistan Limited;


- ICI Pakistan PowerGen Limited;
- Cirin Pharmaceuticals (Private) Limited
- NurtiCo (Morinaga) Private Limited

ICI Pakistan Limited (“the Company”) is incorporated in Pakistan and is listed on The Pakistan Stock Exchange Limited.
ICI Pakistan PowerGen Limited (“PowerGen”) is incorporated in Pakistan as an unlisted public company and is a wholly owned
subsidiary company of ICI Pakistan Limited.
Cirin Pharmaceuticals (Private) Limited (“Cirin”) is incorporated in Pakistan as a private limited company and is a wholly owned
subsidiary company of ICI Pakistan Limited.
NutriCo (Morinaga) Private Limited ("NutriCo Morinaga") is incorporated in Pakistan as a private limited company. ICI Pakistan
Limited has 51% ownership in NutriCo Morinaga.
The Company is engaged in the manufacture of polyester staple fibre, POY chips, soda ash, specialty chemicals, sodium
bicarbonate and polyurethanes; marketing of seeds, toll manufactured and imported pharmaceuticals and animal health products;
and merchanting of general chemicals. It also acts as an indenting agent and toll manufacturer.

PowerGen is engaged in generating, selling and supplying electricity to the Company.

Cirin is engaged in manufacturing and sale of pharmaceutical products.

NutriCo Morinaga is engaged in manufacturing and distribution of infant nutrition formula products.

The Company’s registered office is situated at 5 West Wharf, Karachi.

2 Summary of Significant Accounting Policies

Following are the details of significant accounting policies.

2.1 Statement of compliance

During the year, the Companies Act 2017 (the Act) has been promulgated, however, Securities and Exchange Commission of
Pakistan vide its circular no. 17 of 2017 dated July 20, 2017 communicated that the Commission has decided that the companies
whose financial year closes on or before June 30, 2017 shall prepare their financial statements in accordance with the provisions
of the repealed Companies Ordinance, 1984. Accordingly, these consolidated financial statements have been prepared in
accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such
International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and Islamic
Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under
the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, 1984.
In case requirements differ, the provisions or directives of the repealed Companies Ordinance, 1984 shall prevail.

2.2 Basis of preparation

These consolidated financial statements have been prepared under the historical cost convention, except:

a) certain classes of property, plant and equipment (i.e. freehold land, buildings on freehold and leasehold land and plant and
machinery) have been measured at revalued amounts; and

b) Provision for management staff gratuity and non-management staff gratuity are stated at present value.

The preparation of consolidated financial statements in conformity with approved accounting standards requires management
to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and
liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historical
experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognised
prospectively commencing from the period of revision.

Judgments and estimates made by the management that may have a significant risk of material adjustments to the consolidated
financial statements in subsequent years are discussed in note 46.
ICI Pakistan Limited Annual Report 2016 -17 F 69

2.3 Basis of consolidation

Subsidiaries are those entities over which the Group has control. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only if, the Group has:

- power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

- exposure, or rights, to variable returns from its involvement with the investee; and

- the ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances
in assessing whether it has power over an investee, including:

- the contractual arrangement(s) with the other vote holders of the investee;

- rights arising from other contractual arrangements; and

- the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one
or more of the three elements of control.

Subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date
when such control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed off during the year are
included in the profit and loss account from the date the Group gains control until the date the Group ceases to control the
subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition
is recorded as goodwill. If the cost of acquisition is less than fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the profit and loss account.

After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. For the purposes of impairment
testing, goodwill acquired in a business combination is, on the acquisition date, allocated to each of the Group’s cash generating
units that are expected to benefit from the combination. Goodwill is tested annually or whenever there is an indication of impairment
exists. Impairment loss in respect of goodwill is recognised in profit and loss account and is not reversed in future periods.

The assets, liabilities, income and expenses of subsidiary companies are consolidated on a line by line basis and the carrying
value of investments held by the Holding Company is eliminated against the subsidiaries’ shareholders’ equity in the consolidated
financial statements.

All intra-group transactions, balances, income, expenses and unrealised gains and losses on transactions between Group
companies are eliminated in full.

Subsidiaries have same reporting period as that of the Holding Company. The accounting policies of subsidiaries have been
changed to confirm with accounting policies of the Group, wherever needed.

2.4 Associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not control or joint control over those policies. The considerations
made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.

The Group’s investment in its associate is accounted for using the equity method of accounting. Under the equity method, the
investment in the associate is carried in the balance sheet at cost plus post acquisition changes in the Group’s share of net assets
of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised or
separately tested for impairment.

The Group’s share of its associate’s post-acquisition profits and losses is recognised in the profit and loss account, and its share
of profit of post-acquisition movements in reserve is recognised in consolidated reserves. The cumulative post-acquisition
movements are adjusted against the investment. When the Group’s share of losses in the associate equals or exceeds its interest
F 70 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

in associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associate are eliminated to the extent of the Group’s interest in the
associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises
any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss
of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in
profit or loss.

2.5 Property, plant and equipment and depreciation

Property, plant and equipment (except freehold land, buildings on freehold & leasehold land and plant & machinery) are stated
at cost less accumulated depreciation and impairment losses, if any. Freehold land, buildings on freehold land and leasehold
land and plant and machinery are stated at revalued amounts less subsequent accumulated depreciation and subsequent
impairment losses, if any. Capital work-in-progress is stated at cost less impairment, if any. Cost of certain property, plant and
equipment comprises historical cost. Such cost includes the cost of replacing parts of the property, plant and equipment and
the cost of borrowings for long-term construction projects, if the recognition criteria are met.

Depreciation charge is based on the straight-line method whereby the cost or revalued amount of an asset is written off to profit
and loss account over its estimated useful life after taking into account residual value, if material. The cost of leasehold land is
depreciated in equal installments over the lease period. Depreciation on additions is charged from the month in which the asset
is available for use and on disposals up to the month of disposal.

The residual value, depreciation method and the useful lives of each part of property, plant and equipment that is significant in
relation to the total cost of the asset are reviewed at each balance sheet date, and adjusted, if appropriate.

Maintenance and normal repairs are charged to profit and loss account as and when incurred. Improvements are capitalised
when it is probable that respective future economic benefits will flow to the Group and the cost of the item can be measured
reliably. Assets replaced, if any, are derecognised.

Gains and losses on disposal of assets are taken to the profit and loss account, and the related surplus / deficit on revaluation
of property, plant and equipment is transferred directly to unappropriated profit.

2.6 Intangible assets and amortisation

Intangible assets with a finite useful life, such as certain softwares, licenses (including extraction rights, software licenses, etc.)
and property rights, are capitalised initially at cost and subsequently stated at cost less accumulated amortisation and impairment
losses, if any.

Intangible assets with indefinite useful life such as brands are stated at cost less accumulated impairment losses, if any. These
are tested for impairment annually at year end either individually or at the cash generating unit level, as appropriate when
circumstances indicate the carrying value may be impaired.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditures are recognized in profit and loss account as incurred.

Amortisation is based on the cost of an asset less its residual value. Amortisation is recognized in profit and loss account on a
straight-line basis over the estimated useful lives of intangible assets. Amortisation methods, useful lives and residual values are
reviewed at each balance sheet date and adjusted, if appropriate.

2.7 Investments

Investments that are stated at available for sale are measured at fair value plus directly attributable transaction costs. For
investments traded in active market, fair value is determined by reference to quoted market price and the investments for which
a quoted market price is not available, or the fair value cannot be reasonably calculated, are measured at cost, subject to
impairment review at each balance sheet date.

2.8 Stores, spares and consumables

Stores, spares and consumables are stated at the lower of weighted average cost and net realisable value. Net realizable value
is the estimated selling price in the ordinary course of business less net estimated cost to sell, which is generally equivalent to
replacement cost. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon up to the
balance sheet date.
ICI Pakistan Limited Annual Report 2016 -17 F 71

2.9 Stock-in-trade

Stock-in-trade is valued at the lower of weighted average cost and estimated net realisable value.

Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present
location and condition. Net realisable value signifies the estimated selling price in the ordinary course of business less net estimated
costs of completion and selling expenses.

Stocks in transit are valued at cost comprising invoice value plus other charges incurred thereon up to the balance sheet date.

2.10 Trade debts and other receivables

Trade debts and other receivables are recognised at original invoice amount less provision for doubtful debts and other receivables,
if any. A provision for doubtful debts and other receivables is established when there is objective evidence that the Company
will not be able to collect all amounts due according to the original terms of receivables (Refer note 43.6.1). Bad Debts are written
off when identified.

2.11 Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account, except
to the extent that it relates to items recognised directly in other comprehensive income or below equity, in which case it is
recognised in other comprehensive income or below equity, respectively.

Current

Provision for current taxation is based on taxable income at the enacted or substantively enacted rates of taxation after taking
into account available tax credits and rebates, if any. The charge for current tax includes adjustments to charge for prior years,
if any.

PowerGen's profits and gains derived from power generation are exempt from tax under clause 132 of Part I of the Second
Schedule to the Income Tax Ordinance, 2001 and are also exempt from turnover tax under clause 11A of Part IV of the Second
Schedule of the Income Tax Ordinance, 2001.

Deferred

Deferred tax is recognised using balance sheet method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using the
enacted or substantively enacted rates of taxation. In this regard, the effects on deferred taxation on the portion of income
expected to be subject to final tax regime is adjusted in accordance with the requirements of Accounting Technical Release –
27 of the Institute of Chartered Accountants of Pakistan.

The Group recognises a deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.

Deferred tax relating to items recognised outside profit and loss account is recognised outside profit and loss account. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Further, the Group recognises deferred tax asset / liability on deficit / surplus on revaluation of property, plant and equipment
which is adjusted against the related deficit / surplus.

2.12 Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand and current and deposit accounts held with banks. Short term finance
facilities availed by the Group, which are payable on demand and form an integral part of the Group’s cash management are
included as part of cash and cash equivalents for the purpose of statement of cash flows.

2.13 Impairment

Financial assets

Financial assets are assessed at each reporting date to determine whether there is objective evidence that they are impaired. A
financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset,
F 72 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired may include default or delinquency by a debtor, indications that a debtor
or issuer will enter bankruptcy.

All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be
specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables
that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk
characteristics.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses
are recognised in profit and loss account and reflected in an allowance account against receivables. Interest on the impaired
asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit and loss account.

Non-financial assets

The carrying amounts of non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value-in-use and its fair value less
costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. For the
purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (“the cash-generating unit, or CGU”).

The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be
impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is
recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are
recognised in profit and loss account.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.14 Surplus on revaluation of fixed assets

The surplus arising on revaluation of fixed assets is credited to the “Surplus on Revaluation of property, plant and equipment”
account shown below equity in the balance sheet in accordance with the requirements of section 235 of the repealed Companies
Ordinance, 1984. The said section was amended through the Companies (Amendment) Ordinance, 2002 and accordingly the
Group has adopted the following accounting treatment of depreciation on revalued assets, keeping in view the Securities and
Exchange Commission of Pakistan’s (SECP) SRO 45(1)/2003 dated January 13, 2003:

a) depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation
and depreciation charge for the year is taken to the profit and loss account; and

b) an amount equal to incremental depreciation for the year net of deferred taxation is transferred from “Surplus on Revaluation
of property plant and equipment” account to unappropriated profit / loss through Statement of Changes in Equity to record
realization of surplus to the extent of the incremental depreciation charge for the year.

2.15 Staff retirement benefits

The Group’s retirement benefit plans comprise of provident funds, pensions, gratuity schemes and a medical scheme for eligible
retired employees.

Defined benefit plans

The Group operates a funded pension scheme and a funded gratuity scheme for management staff. The pension and gratuity
schemes are salary schemes providing pension and lump sums, respectively. Pension and gratuity schemes for management
staff are invested through two approved trust funds. The Group also operates gratuity scheme for non-management staff and
the pensioners’ medical scheme which are unfunded. The pension and gratuity plans are final salary plans. The pensioner’s
medical plan reimburses actual medical expenses to pensioners as per entitlement. The Group recognises expense in accordance
with IAS 19 “Employee Benefits”.
ICI Pakistan Limited Annual Report 2016 -17 F 73

An actuarial valuation of all defined benefit schemes is conducted every year. The valuation uses the Projected Unit Credit method.
Actuarial gains and losses are recognized in full in the period in which they occur in other comprehensive income.

All past service costs are recognized at the earlier of when the amendment or curtailment occurs and when the Group has
recognized related restructuring or termination benefits.

Defined contribution plans

The Group operates two registered contributory provident funds for its entire staff and a registered defined contribution
superannuation fund for its management staff, who have either opted for this fund by July 31, 2004 or have joined the Group
after April 30, 2004. In addition to this, the Group also provides group insurance to all its employees.

Compensated absences

The Group recognizes the accrual for compensated absences in respect of employees for which these are earned up to the
balance sheet date. The accrual has been recognized on the basis of actuarial valuation.

2.16 Operating leases / Ijarah contracts

Leases, other than those under Ijarah contracts, in which a significant portion of the risks and rewards of ownership are retained
by the lessor, are classified as operating leases. Ijarah contracts are classified as operating leases irrespective of whether significant
portion of the risks and rewards of ownership are retained by lessor. Payments made under operating leases (net of any incentives
received from the lessor) and Ijarah contracts are charged to the profit and loss account on a straight-line basis over the period
of the lease.

2.17 Trade and other payables

Trade and other payables are recognised initially at fair value plus directly attributable cost, if any.

2.18 Borrowings and their cost

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowing costs are recognised as an expense
in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised as part of the cost of that asset.

2.19 Provisions

A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of obligation. The amount recognized as a provision reflects the best estimate of the expenditure required
to settle the present obligation at the end of the reporting period.

2.20 Financial liabilities

All financial liabilities are initially recognised at fair value net of directly attributable cost, if any, and subsequently measured at
amortised cost.

2.21 Foreign currency translation

Transactions denominated in foreign currencies are translated to Pak Rupees, at the foreign exchange rate prevailing at the date
of transaction. Monetary assets and liabilities in foreign currencies are re-translated into Pak Rupees at the foreign exchange
rates at the balance sheet date. Exchange differences are taken to the profit and loss account.

2.22 Functional and presentation currency

Items included in the consolidated financial statements are measured using the currency of the primary economic environment
in which the Group operates. The consolidated financial statements are presented in Pak Rupees, which is the Group’s functional
and presentation currency.

2.23 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
measured reliably. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates
and government levies.
F 74 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the
customer. For those products which are often sold with a right of return, accumulated experience is used to estimate and provide
for such returns at the time of sale.

Commission income is recognised on date of shipment from suppliers.

Profit on short-term deposits is accounted for on a time-apportioned basis using the effective interest rate method.

Dividend income is recognised when the right to receive dividend is established.

Toll manufacturing income is recognised when services are rendered.

2.24 Financial expense and financial income

Financial expenses are recognised using the effective interest rate method and comprise foreign currency losses and markup /
interest expense on borrowings.

Financial income comprises interest income on funds invested. Markup / interest income is recognised as it accrues in profit and
loss account, using the effective interest rate method.

2.25 Dividend

Dividend distribution to the Group’s shareholders is recognised as a liability in the period in which the dividends are approved.
However, if these are approved after the reporting period but before the financial statement are authorised for issue, disclosure
is made in the financial statements.

2.26 Segment reporting

Segment reporting is based on the operating (business) segments of the Group. An operating segment is a component of the
Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses
that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed
regularly by the Chief Executive Officer (the CEO) to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax assets, liabilities and related
income and expenditure. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and
equipment.

The business segments are engaged in providing products or services which are subject to risks and rewards which differ from
the risk and rewards of other segments. Segments reported are Polyester, Soda Ash, Life Sciences (includes Cirin), Chemicals
and others (PowerGen and NutriCo Morinaga), which also reflects the management structure of the Group.

2.27 Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from
operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative
financial instruments for trading purposes. Derivatives qualifying for hedge accounting are accounted for accordingly whereas,
derivatives that do not qualify for hedge accounting are accounted for as held for trading instruments. All changes in the fair
value are recognized in the profit and loss account.

2.28 Off-setting

Financial assets and liabilities are offset and the net amount is reported in the consolidated financial statements only when there
is, legally enforceable right to set-off the recognised amount and the Group intends either to settle on a net basis, or to realise
the assets and to settle the liabilities simultaneously.
ICI Pakistan Limited Annual Report 2016 -17 F 75

Amounts in PKR ’000


3 Business combination and joint venture

3.1 Acquisition of Cirin Phamraceuticals (Private) Limited

On 23rd December 2016, the Company acquired 100% shareholding of Cirin Pharmaceuticals (Private) Limited against a gross
consideration of PKR 1,075 million.

At the acquisition date, the identifiable assets acquired and liabilities assumed are recognized at their carrying value which are
approximately equal to to fair value, exept:

- Fair valuation of land, buildings and plant and machinery was carried out as at 23rd December 2016 by independent valuer on the
basis of present market value. The fair value of assets fall under level 2 of fair value hierarchy (i.e. significant observable inputs).

- Fair value of intangible assets (brands) is determined at the acquisition date using relief from royalty method. The fair value of intangible
assets fall under level 3 of fair value hierarchy (i.e. input for the asset or liability that are not based on observable market data).

The following summarizes the estimated fair values of consideration paid, non-controlling interests as well as the assets acquired
and liabilities assumed at the date of acquistion:

Fair value Carrying value


recognized on as at 23rd
acquisition December 2016
Fair value of non-current tangible assets:
Land 10,000 4,886
Building 57,117 23,810
Plant and machinery 96,493 29,951
163,610 58,647
Carrying value of non-current tangible assets:
Furniture and equipment 21,473 21,473
Vehicles 32,312 32,312
CWIP 305 305
54,090 54,090

Total indicated value of non-current tangible assets 217,700 112,737

Net current assets:


Stock-in-trade 125,067 125,067
Trade debts 24,875 24,875
Trade and other payables (37,052) (37,052)
Total net current assets 112,890 112,890

Lease liability (19,673) (19,673)


Brands 684,219 -
664,546 (19,673)
Total indicated value of net assets 995,136 205,954
Goodwill 79,864 -
Total gross consideration 1,075,000 -

3.1.1 The management has decided to finalize the determination of valuation of assets acquired within one year from the acquisition
date, which is allowed under IFRS 3 "Business Combinations" as measurement period, therefore provisional figures based on
latest available information have been considered for the acquisition accounting.

3.2 Incorporation of NutriCo Morinaga (Private) Limited

On 6th March 2017, the Company entered into a joint venture with Morinaga Milk Industry Company Limited ("Morinaga") of
Japan and Unibrands (Private) Limited ("Unibrands") to set up a plant for manufacturing infant/growing up formula. To initiate
this project, a new Company has been incorporated which is a subsidiary of ICI Pakistan Limited in which 51% shareholding
is held by ICI Pakistan Limited.
F 76 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

4 Property, plant and equipment

4.1 The following is a statement of property, plant and equipment:

Operating fixed assets - note 4.2 15,534,162 16,001,818


Capital work-in-progress - note 4.7 4,424,453 1,162,951
19,958,615 17,164,769

4.2 The following is a statement of operating fixed assets:


Land Lime beds Buildings Plant and Railway Rolling Furniture Total
Freehold Leasehold on freehold On On machinery sidings stock and and
land freehold leasehold vehicles equipment
land land
Note 4.3 Note 4.3 Note 4.3 & 4.4
As at June 30, 2017

Net carrying value basis

Opening net book value (NBV) 519,718 - 215,405 715,423 1,929,826 12,407,061 - 15,458 198,927 16,001,818
Addition / transfer - note 4.2.1 10,244 - - 7,308 156,690 1,312,785 - 12,976 85,180 1,585,183
Acquisition through business combination 10,000 - - 57,117 - 96,493 - 32,312 21,473 217,395
Revaluation - - - - - - - - - -
Disposal (at NBV) - - - - - - - (2,464) (39) (2,503)
Depreciation charge - note 4.5 - - (16,600) (55,744) (161,123) (1,952,694) - (7,255) (74,315) (2,267,731)
Closing net book value 539,962 - 198,805 724,104 1,925,393 11,863,645 - 51,027 231,226 15,534,162

Gross carrying value basis


Cost / Revaluation 539,962 562,166 359,553 3,101,469 3,246,384 30,923,952 297 187,976 798,323 39,720,082
Accumulated depreciation - (562,166) (160,748) (2,377,365) (1,320,991) (19,060,307) (297) (136,949) (567,097) (24,185,920)
Closing net book value 539,962 - 198,805 724,104 1,925,393 11,863,645 - 51,027 231,226 15,534,162
Depreciation rate % per annum - 2 to 4 5 to 25 5 to 50 3 to 33.33 3.33 to 50 3.33 10 to 33.33 10 to 50

As at June 30, 2016


Net carrying value basis
Opening net book value (NBV) 468,308 - 123,116 736,692 1,144,223 10,020,066 - 22,826 197,995 12,713,226
Addition / transfer - note 4.2.1 22,713 - 92,052 42,856 832,025 3,704,592 - 4,347 65,516 4,764,101
Revaluation 28,697 - 13,842 7,132 82,529 338,732 - - - 470,932
Disposal (at NBV) - - (39) - (6,966) (5,665) - (622) (420) (13,712)
Depreciation charge - note 4.5 - - (13,566) (71,257) (121,985) (1,650,664) - (11,093) (64,164) (1,932,729)
Closing net book value 519,718 - 215,405 715,423 1,929,826 12,407,061 - 15,458 198,927 16,001,818

Gross carrying value basis


Cost / Revaluation 519,718 562,166 359,553 3,037,044 3,088,418 29,535,206 297 127,628 708,073 37,938,103
Accumulated depreciation - (562,166) (144,148) (2,321,621) (1,158,592) (17,128,145) (297) (112,170) (509,146) (21,936,285)
Closing net book value 519,718 - 215,405 715,423 1,929,826 12,407,061 - 15,458 198,927 16,001,818
Depreciation rate % per annum - 2 to 4 5 to 25 5 to 50 3 to 33.33 3.33 to 50 3.33 10 to 33.33 10 to 50

4.2.1 Additions to plant and machinery include transfer from capital work-in-progress.
It also includes borrowing cost for various projects determined using capitalization
rate of nill (June 30, 2016: 6.00%) amounting to: - 132,085
ICI Pakistan Limited Annual Report 2016 -17 F 77

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

4.2.2 Operating fixed assets include the following major spare parts and stand by equipment:

Cost 421,239 403,142


Net book value 139,332 161,208

4.3 Subsequent to revaluation on October 1, 1959, September 30, 2000, December 15, 2006 and December 31, 2011 which had
resulted in a surplus of PKR 14.207 million, PKR 1,569.869 million, PKR 704.752 million and PKR 848.191 million respectively
as at June 30, 2016 further revaluation was conducted resulting in revaluation surplus net of deferred tax liability of PKR 340.721
million. The valuation was conducted by an independent valuer. Valuations for plant and machinery and building were based
on the estimated gross replacement cost, depreciated to reflect the residual service potential of the assets taking account of
the age, condition and obsolescence. Land was valued on the basis of fair market value. The fair value of the assets subject
to revaluation model fall under level 2 of fair value hierarchy (i.e. significant observable inputs).

4.4 Plant and machinery including equipment held with Searle Pakistan Limited (toll manufacturer) is as follows:

As at As at
June 30, June 30,
2017 2016

Cost 9,242 8,111


Net book value 4,160 4,168

For the year For the year


ended ended
June 30, 2017 June 30, 2016

4.5 The depreciation charge for the year has been allocated as follows:

Cost of sales 2,204,798 1,875,991


Selling and distribution expenses 29,665 20,862
Administration and general expenses 33,268 35,876
2,267,731 1,932,729

4.5.1 Depreciation charge is inclusive of the incremental depreciation due to revaluation.

4.6 Had there been no revaluation, the net book value of specific classes of operating property,
plant and equipment would have amounted to:
As at As at
June 30, June 30,
2017 2016

Net book value


Freehold land 201,985 191,741
Buildings 2,366,191 2,419,060
Plant and machinery 11,015,713 11,655,622
13,583,889 14,266,423
F 78 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

4.7 Capital work-in-progress comprises of:

Civil works and buildings 715,276 443,249


Plant and machinery 2,924,642 529,187
Miscellaneous equipment 232,344 28,825
Advances to suppliers / contractors 294,290 70,571
Designing, consultancy and engineering fee 257,901 91,119
4,424,453 1,162,951

This includes interest charged in respect of long-term loans obtained for various projects
determined using capitalization rate of 5.57% (June 30, 2016: 5.48%) amounting to: 69,586 5,498

4.7.1 The following is the movement in capital work-in-progress during the year:

Balance at the beginning of the year 1,162,951 1,675,698


Acquisition through business combination 305 -
Addition during the year 4,756,813 4,183,927
5,920,069 5,859,625
Transferred to operating fixed assets during the year (1,495,616) (4,696,674)
Balance at the end of the year 4,424,453 1,162,951

4.8 Details of operating fixed asset disposal having net book value in excess of PKR 50,000 are as follows:

As at June 30, 2017


Mode of sale Cost Accumulated Net book Sale Particulars of buyers
depreciation value proceeds
Rolling Stock & Vehicles
Loader - Cat 966 F-II Scrap 2,733 2,277 456 45 Ghouri Scrap Dealer
Mandi Bahauddin

As at June 30, 2016


Plant and machinery
65 Ktpa plant, Sodium Scrap 27,813 23,967 3,846 644 Ghouri Scrap Dealer
bicarbonate plant and Mandi Bahauddin
commissioning cost

Building on leasehold land


Infrastructure refurbishment Bidding 14,261 7,545 6,716 1,020 Awan Brothers Karimpura,
Khewra and Ghouri Scrap
Dealer Mandi Bahauddin
Furniture and equipments
HP server for PIII and IBM Scrap 5,824 5,534 290 320 M/s Sh. Auyoub,
Sheikhupura

Rolling stock & vehicles


Fleet car Auction 622 - 622 4,615 Syed Nadeem Raza Ali,
Karachi
ICI Pakistan Limited Annual Report 2016 -17 F 79

Amounts in PKR ’000

5 Intangible assets
As at June 30, 2017
Goodwill Brands Software Licenses Total

Net carrying value basis


Opening net book value (NBV) - - 6,530 9,930 16,460
Addition / transfer - - 4,795 5,204 9,999
Acquisition through business combination - note 5.1 79,864 684,219 - - 764,083
Amortisation charge - note 5.2 - - (2,014) (5,172) (7,186)
Closing net book value 79,864 684,219 9,311 9,962 783,356

Gross carrying amount


Cost 79,864 684,219 184,202 205,157 1,153,442
Accumulated impairment / amortisation - - (174,891) (195,195) (370,086)
Closing net book value 79,864 684,219 9,311 9,962 783,356

Rate of amortisation % per annum 20 20 to 50

As at June 30, 2016


Net carrying value basis
Opening net book value (NBV) - - 1,980 26,338 28,318
Addition / transfer - - 6,096 3,628 9,724
Amortisation charge - note 5.2 - - (1,546) (20,036) (21,582)
Closing net book value - - 6,530 9,930 16,460

Gross carrying amount


Cost - - 179,407 200,674 380,081
Accumulated amortisation - - (172,877) (190,744) (363,621)
Closing net book value - - 6,530 9,930 16,460

Rate of amortisation % per annum 20 20 to 50

5.1 These have been recognized on the acquisition of Cirin Pharmaceuticals (Private) Limited by the Company. These intangible
assets have been treated as having an indefinite useful life because it is expected to contribute to net cash flows indefinitely
based on the analysis of various economic factors prepared by management of the Group which indicated that there is no limit
to the period these assets would contribute to the net cash inflows and, consequently, the said intangibles will not be amoritsed
until their useful life is determined to be finite. However these intangible assets will be tested for impairment annually.

For the year For the year


ended ended
June 30, 2017 June 30, 2016

5.2 The amortisation charge for the year has been allocated as follows:

Cost of sales 1,266 4,491


Selling and distribution expenses 463 2,632
Administration and general expenses 5,457 14,459
7,186 21,582
F 80 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000

As at As at
June 30, June 30,
2017 2016

6 Long-term investments

Unquoted -at equity method


Associate
- NutriCo Pakistan (Private) Limited 40% ownership - note 6.1
200,000 ordinary shares of PKR 1,000 each and premium of PKR 3,800 per share 960,000 960,000
Post acquisition profits at the beginning 1,167 52,224
Share of profit for the year 670,869 407,318
Dividend received (668,000) (458,375)
Carrying Value of Associate 964,036 961,167

Others - at cost
Equity security available-for-sale
-Arabian Sea Country Club Limited
250,000 ordinary shares (June 30, 2016: 250,000) of PKR 10 each 2,500 2,500
966,536 963,667

6.1 The summary of financial information of associate as at the balance sheet date is as follows:

Total assets 4,118,366 4,112,267


Total liabilities 1,698,711 1,699,784
Total equity and reserves 2,419,655 2,412,483
Total revenue 7,909,462 6,670,513
Profit for the year 1,677,172 1,193,752

7 Long-term loans

Considered good
Due from executives and employees - note 7.1 382,421 357,637

7.1 Due from executives and employees


Motor car House Total Total
building
Due from executives - note 7.2, 7.3 and 7.4 279,759 70,595 350,354 282,294
Receivable within one year (71,262) (30,021) (101,283) (68,691)
208,497 40,574 249,071 213,603
Due from employees - note 7.3 158,436 178,458
Receivable within one year (25,086) (34,424)
133,350 144,034
382,421 357,637

Outstanding for period:


- less than three years but over one year 301,517 275,356
- more than three years 80,904 82,281
382,421 357,637

7.2 Reconciliation of the carrying amount of loans to executives:

Balance at the beginning of the year 282,294 245,541


Acquired through business combination 6,150 -
Disbursements during the year 142,845 124,213
Received during the year (80,935) (87,460)
Balance at the end of the year 350,354 282,294
ICI Pakistan Limited Annual Report 2016 -17 F 81

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

7.3 Loans for purchase of motor cars and house building are repayable between two to ten years. These loans are interest free
and granted to the employees, including executives of the Group, in accordance with their terms of employment.

7.4 The maximum aggregate amount of loans due from the executives at the end
of any month during the year: 249,520 301,495

8 Long-term deposits and prepayments

Deposits 30,057 28,209


Prepayments 8,570 5,385
38,627 33,594

9 Stores, spares and consumables

Stores - note 9.1 158,788 100,558


Spares - note 9.1 863,104 807,960
Consumables 132,473 121,244
1,154,365 1,029,762
Provision for slow moving and obsolete stores and spares - note 9.2 (142,984) (168,218)
1,011,381 861,544

9.1 The above amounts include stores and spares in transit: 130,851 70,287

9.2 Movement of provision for slow moving and obsolete stores and spares is as follows:

Balance at the beginning of the year 168,218 189,247


Charge for the year - note 30 - 4,060
Write off during the year (25,234) (25,089)
Balance at the end of the year 142,984 168,218

10 Stock-in-trade

Raw and packing material include in-transit PKR 871.195 million


(June 30, 2016: PKR 818.525 million) - note 10.3 2,574,275 2,290,108
Work-in-process 110,090 140,179
Finished goods include in-transit PKR 6.318 (June 30, 2016: PKR Nil) 3,294,594 3,019,011
5,978,959 5,449,298
Provision for slow moving and obsolete stock-in-trade - note 10.1
- Raw materials (3,988) (11,381)
- Finished goods (61,071) (120,560)
(65,059) (131,941)
5,913,900 5,317,357

10.1 Movement of provision for slow moving and obsolete stock-in-trade is as follows:

Balance at the beginning of the year 131,941 127,067


Charge for the year - note 30 63,729 22,254
Write-off for the year (130,611) (17,380)
Balance at the end of the year 65,059 131,941

10.2 Stock amounting to PKR 734.965 million (June 30, 2016: PKR 338.822 million) is measured at net realisable value and reversal
amounting to PKR 25.648 million (June 30, 2016: PKR 10.999 million expense) has been realized in cost of sales.
F 82 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

10.3 Raw and packing materials held with various toll manufacturers:

Searle Pakistan Limited 111,841 183,246


Maple Pharmaceutical (Private) Limited 984 2,021
EPLA Laboratories (Private) Limited 7,770 -
Breeze Pharma (Private) Limited 10,140 25,133
Nova Med Pharmaceuticals 11,685 32,000
BioGenics 115 -
Other than above 10,287 -
152,822 242,400

11 Trade debts

Considered good
- Secured 392,527 354,531
- Unsecured 2,710,985 1,579,315
3,103,512 1,933,846
Considered doubtful 88,944 43,955
3,192,456 1,977,801
Provision for:
- Doubtful debts - note 43.4 and 43.6 (88,944) (43,955)
- Discounts payable on sales (513,634) (293,779)
(602,578) (337,734)
2,589,878 1,640,067

11.1 The above balances include amounts due from the following associated undertakings which are neither past due nor impaired:

Unsecured
Yunus Textile Mills Limited 1,847 179
Lucky Textile Mills Limited 1,861 948
Lucky Foods (Private) Limited 155 -
Lucky Knits (Private) Limited 528 472
Oil & Gas Development Company Limited 14 14
NutriCo Pakistan (Private) Limited - 2,393
Feroze 1888 Mills Limited - 331
4,405 4,337

12 Loans and advances

Considered good
Loans due from:
Executives - note 12.1 101,283 82,157
Employees 25,086 34,424
126,369 116,581
Advances to:
Executives 15,153 10,768
Employees 4,207 491
Contractors and suppliers - note 12.2 294,562 261,572
Others 1,694 2,950
315,616 275,781
441,985 392,362
ICI Pakistan Limited Annual Report 2016 -17 F 83

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

12.1 The maximum aggregate amount of loans due from the executives at the end of any
month during the year: 48,882 68,691

12.2 The above balances inculde advances to related parties amounting to:

Pakistan Cables Limited 20,853 -


Lucky Cement Limited 1,617 -
22,470 -

13 Trade deposits and short-term prepayments

Trade deposits 148,718 38,001


Short-term prepayments 428,708 392,648
577,426 430,649

14 Other receivables

Considered good
Duties, sales tax and octroi refunds due 986,290 520,981
Commission receivable 42,834 28,046
Due from associate 164,000 -
Receivable from principal - note 14.1 209,114 184,950
Others 215,632 70,423
1,617,870 804,400
Considered doubtful 5,055 1,622
1,622,925 806,022
Provision for doubtful receivables - note 14.2 (5,055) (1,622)
1,617,870 804,400

14.1 This includes receivable from a foreign vendor in relation to margin support guarantee: 128,527 118,528

14.2 Movement of provision for doubtful receivables

Balance at the beginning of the year 1,622 1,622


Charge for the year 3,433 -
Balance at the end of the year 5,055 1,622

15 Cash and bank balances

Cash at bank:
- Short-term deposits - note 15.1 279,350 247,878
- Current accounts 37,937 4,696
- Saving accounts - note 15.2 943,518 -
Cash in hand 5,659 6,388
1,266,464 258,962

15.1 Represent security deposits from customers that are placed with various banks at pre-agreed rate maturing at various dates.
These are interest based arrangements. The mark-up percentage on these deposits during the year was ranging from 5.50%
to 6.50% (June 30, 2016: 6.00% to 7.00%) and these term deposits are readily encashable without any penalty.

15.2 This amount pertains to the initial investment in NutriCo Morinaga which is held for the purpose of construction of plant.
F 84 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at As at As at
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
(Numbers)

16 Issued, subscribed and paid-up capital

Ordinary shares of PKR 10 each fully paid


83,734,062 83,734,062 in cash 837,341 837,341

Ordinary shares of PKR 10 each issued as


fully paid for consideration other than
cash under scheme of arrangement
211,925 211,925 for amalgamation - (note 16.1) 2,119 2,119

Ordinary shares of PKR 10 each issued as


16,786 16,786 fully paid bonus shares 168 168

Ordinary shares issued pursuant to the previous


scheme as fully paid for consideration of
8,396,277 8,396,277 investment in associate (note 16.2) 83,963 83,963

92,359,050 92,359,050 923,591 923,591

16.1 The process for amalgamation of three companies namely Paintex Limited, ICI Pakistan Manufacturers Limited and Imperial
Chemical Industries Limited resulted in a new company as ICI Pakistan Limited on April 01, 1987.

16.2 With effect from October 1, 2000 the Pure Terephthalic Acid (PTA) Business of the Company was demerged under a scheme
of arrangement dated December 12, 2000 approved by the shareholders and sanctioned by the High Court of Sindh.

16.3 As at June 30, 2017, Lucky Holdings Limited together with Gadoon Textile Mills and Lucky Textile Mills Limited held 86.14%
(June 30, 2016: 86.67%) shares, while institutions held 5.73% (June 30, 2016: 8.25%) and individuals and others held the
balance of 8.13% (June 30, 2016: 5.08%).

17 Capital reserves

Share premium - note 17.1 309,057 309,057


Capital receipts - note 17.2 586 586
309,643 309,643

17.1 Share premium includes the premium amounting to PKR 0.902 million received on shares issued for the Company's Polyester
Plant installation in 1980 and share premium of PKR 464.357 million representing the difference between nominal value of PKR
10 per share of 12,618,391 ordinary shares issued by the Company and the market value of PKR 590.541 million of these
shares corresponding to 25% holding acquired in Lotte Pakistan PTA Limited, an ex-associate, at the date of acquisition i.e.
November 2, 2001 and the number of shares that have been issued were determined in accordance with the previous scheme
in the ratio between market value of the shares of two companies based on the mean of the middle market quotation of the
Karachi Stock Exchange (now Pakistan Stock Exchange Limited) over the ten trading days between October 22, 2001 to
November 2, 2001.

17.2 Capital receipts represent the amount received from various ICI plc group companies overseas for the purchase of property,
plant and equipment. The remitting companies have no claim to their repayments.
ICI Pakistan Limited Annual Report 2016 -17 F 85

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

18 Surplus on revaluation of property, plant and equipment

Balance at the beginning of the year 995,330 722,369


Revaluation surplus - note 4.2 & 4.3 - 470,929
Deferred tax liability recognised on surplus - note 21 - (130,207)
- 340,722
Adjustment due to change in tax rate - note 21.1 11,611 3,382
Transferred to unappropriated profit
in respect of incremental depreciation during the
year - net of deferred tax (104,153) (71,143)
Balance at the end of the year 902,788 995,330

19 Provisions for non-management staff gratuity 115,030 90,867

19.1 Staff retirement benefits


2017 2016
Funded Unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total

19.1.1 The amounts recognised in the profit and loss account


against defined benefit schemes are as follows:

Current service cost 13,653 42,966 56,619 4,503 16,554 38,832 55,386 3,389
Interest cost 74,207 47,820 122,027 7,116 85,424 52,368 137,792 7,661
Expected return on plan assets (106,856) (42,640) (149,496) - (123,707) (44,814) (168,521) -
Past service cost / (reversal) - - - - - 1,427 1,427 (1,427)
Net (reversal) / charge for the year (18,996) 48,146 29,150 11,619 (21,729) 47,813 26,084 9,623

Other comprehensive income:

Loss on obligation 142,055 22,379 164,434 9,903 54,496 28,629 83,125 1,579
Gain on plan assets (60,949) (39,238) (100,187) - (43,712) (22,962) (66,674) -
Net (gain) / loss 81,106 (16,859) 64,247 9,903 10,784 5,667 16,451 1,579

19.1.2 Movement in the net assets / (liability) recognised


in the balance sheet are as follows:

Opening balance 421,273 (100,175) 321,098 (90,867) 410,328 (112,378) 297,950 (87,422)
Acquired through business combination - - - (12,759) - - - -
Net reversal / (charge) - note 19.1.1 18,996 (48,146) (29,150) (11,619) 21,729 (47,813) (26,084) (9,623)
Other comprehensive income / (loss) (81,106) 16,859 (64,247) (9,903) (10,784) (5,667) (16,451) (1,579)
Contributions / payments during the year - 66,685 66,685 10,118 - 65,683 65,683 7,757
Closing balance 359,163 (64,777) 294,386 (115,030) 421,273 (100,175) 321,098 (90,867)

19.1.3 The amounts recognised in the balance sheet are as follows:

Fair value of plan assets - note 19.1.5 1,472,114 625,476 2,097,590 - 1,453,265 556,791 2,010,056 -
Present value of defined benefit obligation - note 19.1.4 (1,112,951) (690,253) (1,803,204) (115,030) (1,031,992) (656,966) (1,688,958) (90,867)
Net asset / (liability) 359,163 (64,777) 294,386 (115,030) 421,273 (100,175) 321,098 (90,867)

The recognized asset / liability of funded gratuity is netted off against recognized asset / liability of funded pension and recorded accordingly.

19.1.4 Movement in the present value of defined benefit obligation:

Opening balance 1,031,992 656,966 1,688,958 90,867 955,651 584,006 1,539,657 87,422
Acquired through business combination - - - 12,759 - - - -
Current service cost 13,653 42,966 56,619 4,503 16,554 38,832 55,386 3,389
Interest cost 74,207 47,820 122,027 7,116 85,424 52,368 137,792 7,661
Benefits paid (148,956) (79,878) (228,834) (10,118) (80,133) (48,296) (128,429) (7,757)
Actuarial loss 142,055 22,379 164,434 9,903 54,496 28,629 83,125 1,579
Past service cost / (reversal) - - - - - 1,427 1,427 (1,427)
Closing balance 1,112,951 690,253 1,803,204 115,030 1,031,992 656,966 1,688,958 90,867
F 86 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


2017 2016
Funded Unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total

19.1.5 Movement in the fair value of plan assets:

Opening balance 1,453,265 556,791 2,010,056 - 1,365,979 471,628 1,837,607 -


Expected return 106,856 42,640 149,496 - 123,707 44,814 168,521 -
Contributions - 66,685 66,685 - - 65,683 65,683 -
Benefits paid (148,956) (79,878) (228,834) - (80,133) (48,296) (128,429) -
Actuarial gain 60,949 39,238 100,187 - 43,712 22,962 66,674 -
Closing balance - note 19.1.7 1,472,114 625,476 2,097,590 - 1,453,265 556,791 2,010,056 -

19.1.6 Historical information June 30


2017 2016 2015 2014 2013
Present value of defined benefit obligation 1,918,234 1,779,825 1,627,079 1,627,920 1,700,226
Fair value of plan assets (2,097,590) (2,010,056) (1,837,607) (1,654,533) (1,655,974)
Net (asset ) / liability (179,356) (230,231) (210,528) (26,613) 44,252

19.1.7 Major categories / composition of plan assets are as follows: 2017 2016
Debt instruments 60.69% 72.37%
Equity at market value 32.49% 21.99%
Cash / Others 6.82% 5.63%

Fair value of plan asset Pension Gratuity Pension Gratuity


As at June 30, 2017 As at June 30, 2016
Investment
National savings deposits 41,041 18,655 256,738 17,051
Government bonds 872,860 339,892 852,610 327,732
Mutual Funds 72,440 46,150 60,873 38,750
Shares 476,763 205,390 274,215 167,694
Cash 9,010 15,389 8,829 12,452
Benefits due - - - (6,888)
Total 1,472,114 625,476 1,453,265 556,791

Mortality of active employees and pensioners is represented by the LIC (96-98) table. The table has been rated
down three years for mortality of female pensioners and widows.

Actual return on plan assets during the year: 351,691 239,346

2017 2016

19.1.8 The principal actuarial assumptions at the reporting date were as follows:

Discount rate 7.25% 7.75%


Future salary increases - Management 5.00% 5.75%
Future salary increases - Non - Management 2.75% 3.25%
Future pension increases 2.25% 2.50%

19.1.9 Impact of changes in assumptions on defined benefit scheme Is as follows:

Assumption 1% Increase 1% Decrease


Discount rate (88,708) 103,908
Salary increase 70,404 (64,047)
Pension increase 35,914 (32,424)

As at June As at June
30, 2017 30, 2016
(Unaudited) (Audited)
19.1.10 During the year, the Group contributed in the fund as follows:

Provident fund 88,659 78,611


Defined contribution superannuation fund 76,728 67,426

19.2 Provident fund

Size of the fund 1,250,408 1,169,750


Cost of investments made 1,125,222 1,046,679
Percentage of investments made 90% 89%
Fair value of investments 1,152,476 1,090,817
ICI Pakistan Limited Annual Report 2016 -17 F 87

Amounts in PKR ’000

19.2.1 Break-up of investments of provident fund

Break-up of investments in terms of amount and percentage of the size of the provident fund are as follows:
As at June 30, 2017 As at June 30, 2016
(Unaudited) (Audited)
Investments % of Investments % of
investment investment
as size of as size of
the fund the fund
On fair value
Pakistan Investment Bonds 640,456 56% 559,264 51%
Regular Income Certificates 21,713 2% 19,767 2%
Mutual Funds 57,398 5% 147,454 14%
Shares 432,909 37% 364,332 33%
1,152,476 100% 1,090,817 100%

Investments out of provident fund have been made in accordance with the provisions of section 227 of the repealed Companies Ordinance, 1984 and the rules formulated for this purpose.

As at As at
June 30, June 30,
2017 2016

20 Long-term loans 4,919,478 3,652,586

Loans from banking companies / financial institutions - note 20.1:

Interest based arrangement

Long-term finance facility


United Bank Limited (UBL) 1,353,444 1,282,342
Faysal Bank Limited (FBL) 74,717 74,717
MCB Bank Limited 532,170 217,086

Other long-term loan


Allied Bank Limited (ABL) 83,333 416,668
United Bank Limited (UBL) 2,000,000 2,000,000
Habib Bank Limited (HBL) 510,000 -

Shariah compliant

Islamic term finance


Habib Bank Limited (HBL) 1,000,000 -
First Habib Modarba 13,481 -
Meezan Bank Limited (MBL) - 55,556
5,567,145 4,046,369
Current portion shown under current liabilities (647,667) (393,783)
4,919,478 3,652,586

20.1 Terms and conditions of these borrowings are as follows:

Lenders Mark-up / Profit rate Limit Loan duration Grace period


FBL SBP rate + 45bps 250,000 10 Years 2 Yrs
UBL SBP rate + 50bps 1,500,000 10 Years 2 Yrs
MCB SBP rate + 30 bps 1,500,000 10 Years 2 Yrs
HBL 6MK + 5bps 2,500,000 7 Years 2 Yrs
ABL 3MK + 25bps 1,000,000 4 Years 1 Yr
UBL 3MK + 25bps 2,000,000 5 Years 2 Yrs
First Habib Modaraba 6MK + 225bps 17,757 3 to 5 Years Nil

These loans are secured against the fixed assets of Polyester and Soda Ash Business amounting to PKR 2,500 million and
PKR 7,000 million respectively. Mark-up is payable on quarterly basis.
F 88 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at June 30, 2017 As at June 30, 2016
Opening Reversal Closing Opening Charge/ Recognized Closing
(Reversal) in surplus
on revaluation

21 Deferred tax liability - net

Deductible temporary differences


Provisions for retirement benefits,
doubtful debts and others (239,276) (34,442) (273,718) (230,018) (9,258) - (239,276)
Retirement funds provisions (19,491) (18,227) (37,718) (15,421) (4,070) - (19,491)

Taxable temporary differences


Property, plant and equipment - note 21.1 1,689,556 (153,038) 1,536,518 1,426,606 132,743 130,207 1,689,556
1,430,789 (205,707) 1,225,082 1,181,167 119,415 130,207 1,430,789

21.1 Charge during the year includes amount adjusted in surplus on revaluation
of property, plant and equipment on account of change in tax rate of: 11,611 3,382

22 Liabilities subject to finance lease


As at June 30, 2017 As at June 30, 2016
Minimum Present value of Minimum Present value of
lease minimum lease lease minimum lease
payments payments payments payments

Within one year 2,198 2,009 - -


After one year but not more than five years 826 799
Total minimum lease payments 3,024 2,808 - -
Less: Finance charges allocated to future periods 216 -
Present value of minimum lease payments - note 22.1 2,808 2,808 - -
Less: Current maturity shown under current liability 2,009 2,009
799 799 - -

22.1 Represents conventional obligation in respect of assets acquired under finance lease arrangements from various conventional
financial institutions. Rentals are payable in equal monthly installments. Repairs and insurance costs are to be borne by lessee.
Financing rate ranging from KIBOR plus 3.5 percent to 4 percent per annum has been used as discounting factor. Overdue
rental payments are subject to additional charge upto 2% percent per month or part thereof on all sums not paid by the lessee
when due and payable under the respective agreements. Purchase option can be exercised by the lessee by adjusting security
deposit against residual value at the expiry of the leased period.
As at As at
June 30, June 30,
2017 2016

23 Trade and other payables

Trade creditors 1,846,046 1,309,635


Bills payable 3,301,163 2,557,323
Accrued expenses 2,537,351 1,857,509
Technical service fee / royalty - note 23.1 21,640 19,778
Workers' profit participation fund - note 23.2 243,326 191,680
Workers' welfare fund 65,767 181,209
Distributors' security deposits - payable on termination of distributorship - note 23.3 101,657 101,113
Contractors' earnest / retention money 10,572 10,245
Running account with customers - note 23.4 426,174 302,686
Unclaimed dividends 80,568 70,648
Payable for capital expenditure 1,109,672 547,635
Provision for compensated absences - note 23.5 31,249 31,249
Others 158,527 142,053
9,933,712 7,322,763

23.1 This amount includes royalty payable to Lucky Holdings Limited, the Holding Company. 21,640 18,993
ICI Pakistan Limited Annual Report 2016 -17 F 89

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

23.2 Workers' profit participation fund

Balance at the beginning of the year 191,680 152,453


Acquired through business combination 3,141 -
Allocation for the year - note 31 235,170 189,030
429,991 341,483
Interest on funds utilised in the Group's businesses
at 48.25% (June 30, 2016: 86.25%) per annum - note 32 2,365 3,704

Payment to the fund (189,030) (153,507)


Balance at the end of the year 243,326 191,680

23.3 Interest on security deposits from certain distributors is payable at ranging from 5.50% to 6.50% (June 30, 2016: 6% to 7%)
per annum as specified in the respective agreements.

23.4 Included herein are amounts due to the following associated undertakings (related party):

Fashion Textile Mills (Pvt.) Limited 362 -


Yunus Textile Mills Limited - 106
Lucky Cement Limited - 1,039
362 1,145

23.5 This figure is based on actuarial valuation and estimation.

24 Short-term borrowings and running finance 2,128,905 1,937,184

Short-term borrowings and running finance facility from various banks aggregated to PKR 7,341 million (June 30, 2016: PKR
7,281 million) and carry mark-up during the year ranging from relevant KIBOR negative 0.05% to positive 1.00% per annum
with an average mark-up rate of relevant KIBOR + 0.12% on utilized limits (June 30, 2016: relevant KIBOR + 0.10% to 1.00%
per annum with an average mark-up rate of relevant KIBOR + 0.22% on utilized limits). These facilities are secured by immovable
property and hypothecation charge over the present and future stock-in-trade and book debts of the Group.

24.1 Export refinance 50,000 388,741

The Company has export refinance facility of upto PKR 1200 million available from Faysal Bank Limited as at June 30, 2017
out of which PKR 50 million was utilized (2016: PKR 388.741 million). The above export refinance facility is secured by first
pari passu hypothecation charge. The export refinance facility carries mark-up at State Bank of Pakistan (SBP) rate (currently
2%) + 0.25% per annum (June 30, 2016: SBP rate 3.5% + 0.25% per annum).

24.2 Money Market 550,000 300,000

During the year the Company had obtained a money market loan of PKR 300 million from Standard Chartered Bank Limited
for a term of 3 month at plain KIBOR, and of PKR 250 million from Natioanl Bank of Pakistan for a term of 3 month at relevant
KIBOR minus 5 bps.

24.3 Short-term running finance - secured 1,528,905 1,248,443


F 90 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

25 Contingencies and commitments

25.1 Claims against the Group not acknowledged as debts are as follows:

Local bodies - note 25.1.1 1,400 1,100


Others 15,302 28,529
16,702 29,629

25.1.1 Collectorate of customs - classification issue in PCT heading

Customs raised a demand for PKR 51.5 million relating to classification issue of Titanium Di-Oxide during prior years. During
the current year, Company received a positive outcome for its case filed with Customs Appellate Tribunal and the case was
decided in Company’s favor.

Collectorate of customs raised demand of PKR 17.4 million till 2015-16 against the Company on the ground that Company is
classifying its imported product Wannate 8019 in wrong PCT Heading. During the current year also, consignments were
withheld by Customs Appraisement due to classification issue. For clearance of these consignments, Company paid PKR 15.8
million as Security Deposit for getting Provisional clearance till the final decision of Classifcation Committee and Appellate
forums, which is still awaited.

For one other product Wannate PM 2010/ 8221, consignments were again withheld by Customs Intelligence on Classification issue.
Company paid PKR 94 million as Security Deposit for Provisional Clearance of these consignments till final decision. Classification
committee through a Public notice dated 12th June, 2017 gave its view on classification of the product against the Company. Customs
after the issuance of this Public Notice raised further demand relating to period prior to issuance of Public Notice, amounting to PKR
65 million. Company being dissatisfied with the verdict filed a Suit in Sindh High Court on certain grounds including that applicability
of public notice cannot be done retrospectively. The court has granted a stay in favor of the Company till the next date of hearing. The
Company is confident that it has a strong grounds to defend the case and is hopeful of positive outcome.

25.1.2 Cirin Pharmaceuticals (Pvt.) Ltd has been manufacturing its own registered product Carnem (Meropenem) (“Product”) and
marketing it through a company named Laderly Bio-tech Pharma (‘Laderly’). The agreement for such arrangement expired in
the year 2015 and later completed its extended one-year term in the year 2016. Both companies agreed to manufacture final
batches of the Product just before the acquisition by the Company. However post-acquisition, Laderly demanded to have the
Product transferred in its name.

Thereafter, Laderly initiated legal proceedings against Cirin for getting the product transferred in its name. Cirin’s stance is that
since Laderly does not hold a drug manufacturing license, it is not legally permissible for Laderly to manufacture drugs, and
therefore the Product cannot be transferred to Laderly. At present, the matter is pending adjudication in court and Cirin is
strongly contesting the matter. The chances of a favorable outcome for Cirin are expected.

25.2 Tax related contingencies are disclosed in note 46 to these consolidated financial statements for income tax and sales tax
contingencies.

25.3 Commitments in respect of capital expenditure including various projects of the


Soda Ash business: 1,888,030 2,193,478

25.4 Commitments for rentals under operating lease / Ijarah contracts in respect of vehicles are as follows:

Year
2016-17 - 64,050
2017-18 72,921 44,247
2018-19 60,110 28,227
2019-20 39,393 6,550
2020-21 18,186 -
190,610 143,074

Payable not later than one year 72,921 64,050


Payable later than one year but not later than five years 117,689 79,024
190,610 143,074
ICI Pakistan Limited Annual Report 2016 -17 F 91

Amounts in PKR ’000


26. Operating segment results
Polyester Soda Ash Life Sciences Chemicals Others Group
For the For the For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Sales
Afghanistan - - 59,967 34,502 - - 1,247 8,711 - - 61,214 43,213
India - - 584,537 704,327 - - - - - - 584,537 704,327
United Kingdom - - - - - - - 2,192 - - - 2,192
Others - - - - 1,980 - - - - - 1,980 -
- - 644,504 738,829 1,980 - 1,247 10,903 - - 647,731 749,732
Inter-segment - - - - - - 7,214 4,610 527,052 455,181 534,266 459,791
Local 14,647,604 14,235,639 13,159,554 12,653,113 14,173,116 10,265,352 5,504,214 4,739,851 - - 47,484,488 41,893,955
14,647,604 14,235,639 13,804,058 13,391,942 14,175,096 10,265,352 5,512,675 4,755,364 527,052 455,181 48,666,485 43,103,478
Commission /
Toll income - - - - 10,145 - 55,085 45,681 - - 65,230 45,681
Turnover 14,647,604 14,235,639 13,804,058 13,391,942 14,185,241 10,265,352 5,567,760 4,801,045 527,052 455,181 48,731,715 43,149,159
Sales tax - (414,677) (1,897,987) (1,848,888) (135,821) (141,338) (622,360) (540,998) (76,580) (66,137) (2,732,748) (3,012,038)
Commission
and discounts (259,549) (393,753) (865,387) (702,375) (2,489,130) (1,413,689) (155,997) (279,213) - - (3,770,063) (2,789,030)
(259,549) (808,430) (2,763,374) (2,551,263) (2,624,951) (1,555,027) (778,357) (820,211) (76,580) (66,137) (6,502,811) (5,801,068)
Net turnover 14,388,055 13,427,209 11,040,684 10,840,679 11,560,290 8,710,325 4,789,403 3,980,834 450,472 389,044 42,228,904 37,348,091
Cost of sales
- note 28 (14,251,410) (13,765,271) (7,727,970) (7,432,444) (8,124,521) (6,195,958) (3,734,456) (3,086,848) (376,507) (297,630) (34,213,124) (30,776,411)
Gross profit 136,645 (338,062) 3,312,714 3,408,235 3,435,769 2,514,367 1,054,947 893,986 73,965 91,414 8,015,780 6,571,680

Selling and distribution


expenses - note 29 (242,348) (243,280) (296,027) (310,371) (1,810,828) (1,266,174) (339,031) (298,317) - - (2,688,234) (2,118,142)
Administration and
general expenses
- note 30 (332,202) (274,325) (287,018) (241,827) (374,348) (232,148) (147,289) (133,377) (509) (593) (1,141,126) (882,030)

Operating result (437,905) (855,667) 2,729,669 2,856,037 1,250,593 1,016,045 568,627 462,292 73,456 90,821 4,186,420 3,571,508

26.1 Segment assets


- note 26.5 9,682,810 8,085,224 20,853,429 16,782,250 8,277,934 7,011,907 4,082,046 3,152,394 1,390,974 388,906 33,817,840 27,277,801

26.2 Unallocated assets 2,984,087 3,197,915

36,801,927 30,475,716

26.3 Segment liabilities


- note 26.5 13,710,932 12,368,868 3,925,251 2,034,908 3,232,079 2,187,208 1,129,720 734,635 71,522 45,106 11,196,064 8,773,771

26.4 Unallocated liabilities 7,880,091 6,131,864

19,076,155 14,905,635

26.5 Inter unit current account balances of respective businesses have been eliminated from the total

26.6 Depreciation and


amortisation charge
note 4.5 and 5.2 791,828 819,631 1,357,068 1,016,718 43,856 29,723 38,819 33,166 43,346 55,073 2,274,917 1,954,311

26.7 Capital expenditure 253,982 222,744 4,376,082 3,937,224 84,669 47,953 88,776 46,232 52,870 6,925 4,856,379 4,261,078

26.8 Inter-segment pricing

Transactions among the business segments are recorded at arm's length prices using admissible valuation methods.

26.9 There were no major customer of the Group which formed part of 10% or more of the Group's revenue.
F 92 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000

For the For the


year Year
ended ended
June 30, 2017 June 30, 2016

27 Reconciliations of reportable segment revenues, cost of sales, assets and liabilities

27.1 Turnover

Total turnover for reportable segments - note 26 48,731,715 43,149,159


Elimination of inter-segment turnover - note 26 (7,214) (4,610)
Elimination of inter-segment turnover from the subsidiary (450,472) (389,044)
Total turnover 48,274,029 42,755,505

27.2 Cost of sales

Total cost of sales for reportable segments - note 28 34,213,124 30,776,411


Elimination of inter-segment purchases - note 28 (7,214) (4,610)
Elimination of inter-segment purchases from the subsidiary (450,472) (389,044)
Total cost of sales 33,755,438 30,382,757

As at As at
June 30, June 30,
2017 2016

27.3 Assets

Total assets for reportable segments 33,817,840 27,277,801


Taxation recoverable 1,253,468 2,234,248
Intangibles - goodwill and brands 764,083 -
Long-term investments - note 6 966,536 963,667
Total assets 36,801,927 30,475,716

27.4 Liabilities

Total liabilities for reportable segments 11,196,064 8,773,771


Short-term borrowings and running finance - note 24 2,128,905 1,937,184
Long-term loan - note 20 5,567,145 4,046,369
Accrued mark-up 103,473 77,663
Unclaimed dividends - note 23 80,568 70,648
Total Liabilities 19,076,155 14,905,635
ICI Pakistan Limited Annual Report 2016 -17 F 93

Amounts in PKR ’000


28. Cost of Sales
Polyester Soda Ash Life Sciences Chemicals Others Group
For the For the For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Raw and packing


materials consumed
Opening stock 644,917 665,385 625,823 405,275 821,960 690,608 219,532 295,456 20,611 21,643 2,332,843 2,078,367
Purchases
Inter-segment 5,532 4,106 - - 1,682 504 - - - - 7,214 4,610
Others 11,801,977 10,982,051 2,223,176 2,506,983 2,191,148 2,030,953 2,008,727 1,427,390 289,143 194,507 18,514,171 17,141,884

11,807,509 10,986,157 2,223,176 2,506,983 2,192,830 2,031,457 2,008,727 1,427,390 289,143 194,507 18,521,385 17,146,494

12,452,426 11,651,542 2,848,999 2,912,258 3,014,790 2,722,065 2,228,259 1,722,846 309,754 216,150 20,854,228 19,224,861

Closing stock - note 10 (742,941) (644,917) (645,261) (625,823) (724,286) (767,844) (436,174) (219,532) (21,625) (20,611) (2,570,287) (2,278,727)

Raw and packaging


material consumed 11,709,485 11,006,625 2,203,738 2,286,435 2,290,504 1,954,221 1,792,085 1,503,314 288,129 195,539 18,283,941 16,946,134

Salaries, wages
and benefits - note 28.1 485,944 436,141 808,959 751,389 88,453 25,203 67,764 58,076 17,737 17,603 1,468,857 1,288,412

Stores and spares


consumed 182,685 188,411 162,273 144,872 1,282 (691) 12,907 11,304 19,281 20,617 378,428 364,513

Conversion fee paid to


contract manufacturers - - - - 385,683 376,652 14,269 9,382 - - 399,952 386,034

Oil, gas and electricity 1,133,944 1,029,957 2,629,665 2,825,500 17 - 20,864 18,023 578 1,768 3,785,068 3,875,248

Rent, rates and taxes 1,698 1,649 1,371 1,338 14,605 13,983 41,632 30,062 450 420 59,756 47,452

Insurance 15,946 19,194 26,972 27,232 569 34 1,699 1,306 1,038 1,255 46,224 49,021

Repairs and maintenance 12,632 11,812 6,105 1,463 5,080 3,281 6,887 5,380 120 130 30,824 22,066

Depreciation and
amortisation charge
- note 4.5 and 5.2 779,835 801,217 1,344,567 999,894 14,901 6,051 23,415 18,247 43,346 55,073 2,206,064 1,880,482

Excise duty - - - - - - - - 4,587 3,934 4,587 3,934

Technical fees - - - - 3,416 3,035 591 2,876 - - 4,007 5,911

Royalty - - - - 4,476 3,605 - - - - 4,476 3,605

General expenses 199,663 211,454 228,257 188,528 38,524 7,413 40,133 29,684 1,241 1,291 506,078 436,630

Opening stock of
work-in-process 96,152 72,137 - - 77,208 13,391 7,284 10,506 - - 180,644 96,034

Closing stock of
work-in-process
- note 10 (52,831) (96,152) - - (53,231) (36,743) (4,028) (7,284) - - (110,090) (140,179)

Cost of goods
manufactured 14,565,153 13,682,445 7,411,907 7,226,651 2,871,487 2,369,435 2,025,502 1,690,876 376,507 297,630 27,248,816 25,265,297

Opening stock of
finished goods 401,556 484,382 133,957 182,030 1,947,861 1,668,871 440,433 433,725 - - 2,923,807 2,769,008

Finished goods
purchased 18,588 - 270,003 157,720 5,246,319 4,090,211 1,802,843 1,414,880 - - 7,337,753 5,662,811

14,985,297 14,166,827 7,815,867 7,566,401 10,065,667 8,128,517 4,268,778 3,539,481 376,507 297,630 37,510,376 33,697,116

Closing stock of
finished goods - note 10 (733,887) (401,556) (87,897) (133,957) (1,879,187) (1,922,505) (532,552) (440,433) - - (3,233,523) (2,898,451)

Provision for slow


moving and obsolete
stock-in-trade - note 30 - - - - (61,959) (10,054) (1,770) (12,200) - - (63,729) (22,254)

14,251,410 13,765,271 7,727,970 7,432,444 8,124,521 6,195,958 3,734,456 3,086,848 376,507 297,630 34,213,124 30,776,411

28.1 Staff retirement benefits

Salaries, wages and benefits include amounts in respect of staff retirement benefits: 93,775 89,692
F 94 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


29. Selling and distribution expenses
Polyester Soda Ash Life Sciences Chemicals Others Group
For the For the For the For the For the For the For the For the For the For the For the For the
year year year year year year year year year year year year
ended ended ended ended ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Salaries and benefits


- note 29.1 49,641 44,052 42,233 42,058 818,954 609,675 169,886 142,537 - - 1,080,714 838,322

Repairs and maintenance 205 149 1,036 1,241 5,522 4,783 3,852 2,771 - - 10,615 8,944

Advertising and publicity


expenses 23,420 25,100 28,900 10,902 354,009 207,042 8,901 10,677 - - 415,230 253,721

Rent, rates and taxes 552 527 2,781 3,136 22,311 13,847 1,616 1,363 - - 27,260 18,873

Insurance - - 342 312 16,121 10,887 2,027 3,245 - - 18,490 14,444

Lighting, heating and cooling 134 125 2,214 2,328 5,379 4,482 4,137 4,772 - - 11,864 11,707

Depreciation and amortisation


charge - note 4.5 and 5.2 - - 86 108 21,242 14,403 8,800 8,983 - - 30,128 23,494

Write-offs - - - - - - - - - - - -

Outward freight and


handling 1,180 18,287 88,417 127,031 172,681 106,930 80,514 72,058 - - 342,792 324,306

Travelling expenses 12,321 9,486 3,417 3,806 209,587 167,703 23,369 21,638 - - 248,694 202,633

Postage, telegram,
telephone and telex 1,216 1,578 2,009 1,771 23,163 18,096 3,724 3,651 - - 30,112 25,096

Royalty 143,844 134,272 110,407 108,407 - - - - - - 254,251 242,679

General expenses 9,835 9,704 14,185 9,271 161,859 108,326 32,205 26,622 - - 218,084 153,923

242,348 243,280 296,027 310,371 1,810,828 1,266,174 339,031 298,317 - - 2,688,234 2,118,142

29.1 Staff retirement benefits


Salaries and benefits includes amount in respect of staff retirement benefits: 59,573 51,830

30. Administration and general expenses


Salaries and benefits
- note 30.1 199,205 169,001 180,905 150,715 163,615 121,191 102,577 85,988 - (29) 646,302 526,866

Repairs and maintenance 3,738 3,341 4,217 3,889 6,063 5,935 812 763 - - 14,830 13,928

Advertising and publicity


expenses 2,877 1,454 3,259 1,730 1,125 564 855 419 - - 8,116 4,167

Rent, rates and taxes 6,383 6,017 3,113 3,047 6,225 1,747 673 659 - - 16,394 11,470

Insurance 1,022 1,058 1,223 1,265 4,957 4,220 288 399 - - 7,490 6,942

Lighting, heating and


cooling 5,685 6,573 4,137 4,526 10,806 12,654 4,029 4,525 - - 24,657 28,278

Depreciation and
amortisation charge
- note 4.5 and 5.2 11,993 18,414 12,415 16,716 7,713 9,269 6,604 5,936 - - 38,725 50,335

Provision for doubtful


debts - note 43.6 553 548 - - 37,618 6,752 675 2,890 - - 38,846 10,190

Provision for slow moving


and obsolete stock-in-trade
- note 10.1 - - - - 61,959 10,054 1,770 12,200 - - 63,729 22,254

Provision for slow moving


stores and spares
- note 9.2 - - - 4,060 - - - - - - - 4,060

Travelling expenses 8,808 7,834 6,512 5,518 11,367 8,491 3,503 2,318 - - 30,190 24,161

Postage, telegram,
telephone and telex 3,648 3,244 2,833 2,649 5,336 4,100 1,739 1,571 - - 13,556 11,564

General expenses 88,290 56,841 68,404 47,712 57,564 47,171 23,764 15,709 509 622 238,291 167,815

332,202 274,325 287,018 241,827 374,348 232,148 147,289 133,377 509 593 1,141,126 882,030

30.1 Staff retirement benefits


Salaries and benefits includes amount in respect of staff retirement benefits: 61,913 22,073
ICI Pakistan Limited Annual Report 2016 -17 F 95

Amounts in PKR ’000


For the For the
year ended Year ended
June 30, 2017 June 30, 2016

31 Other charges

Auditors' remuneration - note 31.1 6,097 5,239


Donations - note 31.2 20,000 20,000
Workers' profit participation fund - note 23.2 235,170 189,030
Workers' welfare fund 59,195 73,222
Workers' welfare fund - Reversal - note 31.3 (174,638) -
Loss on disposal of operating fixed assets - 2,701
Others 28,344 1,500
174,168 291,692

31.1 Auditors' remuneration

Statutory audit fee 3,671 3,034


Half yearly review and other certifications 1,264 1,271
Out of pocket expenses 1,162 934
6,097 5,239

31.2 Represent provision in respect of donation to ICI Pakistan Foundation (Head office, Karachi). Mr. Asif Jooma, Director of the
Group, Mr. Suhail Aslam Khan, Mr. Arshaduddin Ahmed, Ms. Saima Kamila Khan and Ms. Fathema Zuberi, Executives of the
Group are amongst the Trustees of the Foundation.

31.3 Through the Finance Acts of 2006 and 2008, certain amendments were brought in the Workers’ Welfare Fund Ordinance, 1971
(WWF Ordinance) including the levy of WWF which had been originally calculated at the rate of 2% of the total (taxable) income
of the industrial establishment in a particular year, was amended to charge on higher of total (taxable) income or profit before tax
as per account. During the year, the Honorable Supreme Court of Pakistan through its judgement dated 10 October 2016, in Civil
Appeals No. 1049 to 1055/2011 decided that amendments in WWF Ordinance made through Finance Acts were unconstitutional.
Accordingly, the Company has reversed the excess provision calculated on the basis of profit before tax as per accounts.

32 Finance costs

Mark-up 313,464 260,200


Interest on workers' profit participation fund - note 23.2 2,365 3,704
Discounting charges on receivables 70,388 55,748
Exchange losses 13,087 60,005
Guarantee fee and others 3,902 4,588
403,206 384,245

33 Other income

Income from financial assets

Profit on short-term and call deposits - note 33.1 14,553 8,151

Income from non-financial assets

Scrap sales 82,634 60,803


Sales from scrap raw materials 1,164 12,754
Gain on disposal of operating fixed assets 7,285 -
Provisions and accruals no longer required written back 5,679 369
Sundries 3,725 1,842
115,040 83,919

33.1 These are interest-based arrangements.


F 96 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


For the For the
year ended Year ended
June 30, 2017 June 30, 2016

34 Taxation

Current 1,290,717 530,120


Deferred (175,869) 126,867
Net tax charged - note 34.1 1,114,848 656,987

34.1 Tax reconciliation

Profit before tax 4,394,955 3,386,808

Tax @ 31% (June 30, 2016: 32%) 1,362,436 1,083,779


Effect of profit of subsidiary (38,750) (28,673)
Effect of share of profit from associate (123,580) (130,342)
Effect of credit under section 65B (130,996) (355,500)
Effect of change in tax rate on beginning deferred tax (36,694) (41,612)
Others 82,432 129,335
Net tax charged 1,114,848 656,987

Average effective tax rate 25.37% 19.40%

35 Basic and diluted earnings per share (EPS)

Profit after taxation for the year 3,282,747 2,729,821

Number of shares

Weighted average number of ordinary shares in issue during the year 92,359,050 92,359,050

PKR

Basic and diluted earnings per share (EPS) 35.54 29.56

36 Cash flows from operating activities

Profit before taxation 4,394,955 3,386,808

Adjustments for:
Depreciation and amortization - note 4.5 and 5.2 2,274,917 1,954,311
Loss / (gain) on disposal of operating fixed assets - note 31 and 33 (7,285) 2,701
Provision for staff retirement benefit plan - note 19.1.1 29,150 26,084
Provisions for non-management staff gratuity and eligible retired employees' medical scheme 31,302 32,450
Interest on short-term bank deposits (14,553) (8,151)
Share of profit from associate (670,869) (407,318)
Interest expense 390,118 324,240
Provision for doubtful debts - note 43.6 38,846 10,190
Provision for slow moving and obsolete stock-in-trade - note 10.1 63,506 22,254
Provision for slow moving stores and spares - note 9.2 - 4,060
Provisions and accruals no longer required written back (5,679) (369)
6,524,408 5,347,260
Movement in:
Working capital - note 36.1 (555,791) (284,954)
Long-term loans (18,626) (31,122)
Long-term deposits and prepayments (5,034) (2,818)
5,944,957 5,028,366
ICI Pakistan Limited Annual Report 2016 -17 F 97

Amounts in PKR ’000


For the For the
year ended Year ended
June 30, 2017 June 30, 2016

36.1 Movement in working capital

Increase in current assets


Stores, spares and consumables (149,837) (156,406)
Stock-in-trade (547,425) (396,202)
Trade debts (964,096) (219,163)
Loans and advances (50,233) (66,734)
Trade deposits and short-term prepayments (169,824) 5,747
Other receivables (638,504) 181,269
(2,519,919) (651,489)
Increase in current liabilities
Trade and other payables 1,964,128 366,535
(555,791) (284,954)

37 Remuneration of chief executive, directors and executives

The amounts charged in the financial statements for the remuneration, including all benefits, to the chief executive, directors and executives
of the Group were as follows:
Chief Executive Directors Executives Total

For the For the For the For the For the For the For the For the
year year year year year year year year
ended ended ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016
Managerial remuneration 52,137 49,844 34,104 32,117 920,399 807,571 1,006,640 889,532
Retirement benefits 8,610 8,197 6,059 5,712 199,622 177,700 214,291 191,609
Group insurance 55 45 55 45 7,009 5,605 7,119 5,695
Rent and house maintenance 1,636 1,096 - - 269,318 235,874 270,954 236,970
Utilities 1,033 844 - - 68,246 59,640 69,279 60,484
Medical expenses 210 85 62 335 33,498 48,165 33,770 48,585
63,681 60,111 40,280 38,209 1,498,092 1,334,555 1,602,053 1,432,875
Number of persons as at the
balance sheet date 1 1 1 1 632 575 634 577

37.1 The directors and certain executives are provided with free use of cars (obtained on lease by Company) in accordance with their entitlement.
The chief executive is provided with free use of the Company leased car, certain household equipment and maintenance when needed.

For the For the


year ended year ended
June 30, 2017 June 30, 2016

37.2 Remuneration paid to Chairman during the year: - -

37.3 During the year fee paid to non-executive directors for attending board and other
meetings, which is not part of remuneration amounts to: 3,313 2,813

As at and for As at and for


the year ended the year ended
June 30, 2017 June 30, 2016

37.4 Total number of employees as at the balance sheet date 1,805 1,757

Average number of employees during the year 1,809 1,730


F 98 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


38. Transactions with related parties

The related parties comprise the holding company (Lucky Holdings Limited), the ultimate parent company (Lucky Cement
Limited) and related group companies, local associated companies, directors of the Company, companies where directors also
hold directorship, key employees (note 37) and staff retirement funds (note 19). Details of transactions with related parties,
other than those which have been specifically disclosed elsewhere in these financial statements are as follows:

For the For the


year ended year ended
June 30, 2017 June 30, 2016
Relationship with the company Nature of transaction

Holding Company Dividend 1,170,969 896,952


Royalty 254,251 242,679

Associated companies Purchase of goods, materials and services 118,276 101,833


Sale of goods and materials 1,424,859 1,477,802
Dividend received from associate 668,000 458,375
Reimbursement of expenses 88,272 61,760
Dividend paid to associates 187,988 143,755
Donations paid 20,000 -

Key management personnel Remuneration paid 195,068 182,620


Post employment benefits 31,159 30,850

39. Plant capacity and annual production

- in metric tonnes except PowerGen which is in thousands of Megawatt hours and Nutraceuticals which is in packs:

For the year ended For the year ended


June 30, 2017 June 30, 2016
Annual Production Annual Production
Name Plate Name Plate
Capacity Capacity

Polyester 122,250 121,929 122,250 118,859


Soda Ash 350,000 342,416 350,000 337,869
Chemicals - note 39.2 - 14,210 - 12,950
Sodium Bicarbonate 40,000 31,660 40,000 29,330
PowerGen - note 39.3 122,640 30,412 122,640 29,178
Nutraceuticals and Cirin - note 39.2 and 39.4 - 3,018,534 - 836,332

39.1 Production of Soda Ash as compared to last year was greater due to commissioning of Coal fired boilers 3 and 4, dense ash,
and light ash projects. Annual name plate capacity of Sodium Bicarbonate also increased due to commissioning of RSB project.
Out of total production of 342,416 metric tonnes Soda Ash, 28,495 metric tonnes was transferred for production of 31,660
tonnes of Sodium Bicarbonate.

39.2 The capacity Chemicals, Neutraceuticals and Cirin is indeterminable because these are multi-product with multiple dosage and
multiple pack size plants.

39.3 Electricity by PowerGen is produced as per demand of the Polyester division of the Holding Company.

39.4 Last year includes six month production after commissioning of Nutra plant.

40 Fair value of financial assets and liabilities

The carrying amounts of the financial assets and financial liabilities as at the balance sheet date approximate their fair values.
ICI Pakistan Limited Annual Report 2016 -17 F 99

Amounts in PKR ’000

41 Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and other
price risk), credit risk and liquidity risk. The Group's overall risk management policy focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Group's financial performance.

41.1 Risk management framework

The Board of Directors has overall responsibility for establishment and oversight of the Group's risk management framework.
The executive management team is responsible for developing and monitoring the Group’s risk management policies. The team
regularly meets and any changes and compliance issues are reported to the Board of Directors through the audit committee.

Risk management systems are reviewed regularly by the executive management team to reflect changes in market conditions
and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees compliance by management with the Group’s risk management policies and procedures, and
reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

42 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk currency risk, interest rate risk and other price risk.

42.1 Interest rate risk

Interest rate risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Group mitigates its risk against the exposure by focusing on short-term investment and maintaining
adequate bank balances. At the balance sheet date the interest rate profile of Group's interest-bearing financial instruments
were:

Carrying Amount
As at June As at June
30, 2017 30, 2016
Fixed rate instruments
Financial assets - Note 15 1,222,868 247,878
Financial liabilities - Note 20 and 21 (2,061,988) (1,675,258)
(839,120) (1,427,380)

Variable rate instruments


Financial liabilities - note 20 and 24 (4,212,238) (4,409,407)
(4,212,238) (4,409,407)

Sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, therefore a change
in interest rates at the balance sheet date would not affect profit or loss.

Sensitivity analysis for variable rate instruments

If KIBOR had been 1% higher / lower with all other variables held constant, the impact on the profit before tax for the year would
have been PKR 42.122 million (June 30, 2016: PKR 44.094 million).
F 100 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


42.2 Foreign currency risk

"Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates. Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into are
denominated in foreign currencies. The Group is exposed to foreign currency risk on sales and purchases which are entered in a
currency other than Pak Rupees. When the management expects future depreciation of Pak Rupees, the Group enters into forward
foreign exchange contracts in accordance with State Bank of Pakistan instructions and the Group's treasury policy. The policy allows
the Group to take currency exposure within predefined limits while open exposures are rigorously monitored.

Following is the gross balance sheet exposure classified into separate foreign currencies:

CNY EURO USD GBP JPY


As at June 30, 2017
Other receivables - 990 33,346 - -
- 990 33,346 - -
Trade and other payables (606,417) (158,390) (2,152,362) (10,096) (549)
Gross balance sheet exposure (606,417) (157,400) (2,119,016) (10,096) (549)

As at June 30, 2016

Other receivables 3,583 406 18,944 49 -


3,583 406 18,944 49 -
Trade and other payables - (140,419) (1,801,105) (5,978) (348)
Gross balance sheet exposure 3,583 (140,013) (1,782,161) (5,929) (348)

Significant exchange rates applied during the year were as follows:


Average rate Spot rate
For the For the As at As at
year ended year ended June 30, June 30,
June 30, June 30, 2017 2016
2017 2016
PKR per PKR PKR
EURO 114.22 115.73 119.63 116.80
USD 104.81 104.35 104.85 104.83
GBP 132.93 155.15 136.24 141.43
CNY 15.39 16.22 15.47 15.78
JPY 0.96 0.89 0.94 1.02

Sensitivity analysis
Every 1% increase or decrease in exchange rate with all other variables held constant will decrease or increase profit before
tax for the year by PKR 28.935 million (June 30, 2016: PKR 19.249 million). The following table demonstrates the sensitivity to
the change in exchange rates. As at June 30, 2017, if Pak Rupee (PKR) had weakened / strengthened by 1% against other
currencies, with all other variables held constant, the effect on the Group's profit before tax at June 30, 2017 and June 30,
2016 would be as follows:

Increase / Effect on Effect on Effect on Effect on Effect on


decrease in Profit Profit Profit Profit Profit
exchange before tax before tax before tax before tax before tax
rates (CNY) (EURO) (USD) (GBP) (JPY)

2017
Pak Rupee +1% 6,064 1,574 21,190 101 5
Pak Rupee -1% (6,064) (1,574) (21,190) (101) (5)

2016
Pak Rupee +1% (36) 1,400 17,822 59 3
Pak Rupee -1% 36 (1,400) (17,822) (59) (3)
ICI Pakistan Limited Annual Report 2016 -17 F 101

Amounts in PKR ’000


43 Credit risk

Credit risk represents the accounting loss that would be recognised at the reporting date if counter-parties failed completely to
perform as contracted. The Group does not have significant exposure to any individual counter-party. To reduce exposure to credit
risk the Group has developed a formal approval process whereby credit limits are applied to its customers. The management also
regularly monitors the credit exposure towards the customers and makes provision against those balances considered doubtful
of recovery. To mitigate the risk, the Group has a system of assigning credit limits to its customers based on evaluation based on
customer profile and payment history. Outstanding customer receivables are regularly monitored. Some customers are also
secured, where possible, by way of inland letters of credit, cash security deposit, bank guarantees and insurance guarantees.

The Group's gross maximum exposure to credit risk at the balance sheet date is as follows:
As at As at
June 30, June 30,
2017 2016

43.1 Financial assets

Long-term investment - note 6 966,536 963,667


Long-term loans - note 7 382,421 357,637
Long-term deposits - note 8 30,057 28,209
Trade debts - note 11 2,589,878 1,640,067
Loans and advances - note 12 441,985 392,362
Trade deposits - note 13 148,718 38,001
Other receivables - note 14 631,580 283,419
Bank balances - note 15 1,260,805 252,574
6,451,980 3,955,936

43.2 The Group has placed its funds with banks which are rated A1+ by PACRA and A-1+ by JCR-VIS.

43.3 Financial assets

- Secured 920,677 814,236


- Unsecured 5,531,303 3,141,700
6,451,980 3,955,936

43.4 The ageing of trade debts and loans and advances at the balance sheet date is as follows:

Not past due 2,581,245 1,856,497

Past due but not impaired:


Not more than three months 462,100 160,408

Past due and Impaired:


More than three months and not more than six months 36,274 8,805
More than six months and not more than nine months 778 734
More than nine months and not more than one year 20,101 22,545
More than one year 20,309 27,395
539,562 219,887
Provision for:
- Doubtful debts - note 11 (88,944) (43,955)
3,031,863 2,032,429

43.4.1 There were no past due or impaired receivables from related parties.
F 102 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


As at As at
June 30, June 30,
2017 2016

43.5 The maximum exposure to credit risk for past due at the reporting date by type of counterparty was:

Wholesale customers 73,749 10,962


Retail customers 465,799 172,969
End-user customers 14 35,956
539,562 219,887
Provision for:
- Doubtful debts - note 11 (88,944) (43,955)
450,618 175,932

43.6 Movement of provision for doubtful debts, loans and advances

Trade debts Loans and Total Total


advances

Balance at the beginning of the year 43,955 - 43,955 40,987


Acquisition through business combination 6,143 - 6,143 -
Additional provision - note 30 38,846 - 38,846 10,190
Written off during the year - - - (7,222)
Balance at the end of the year 88,944 - 88,944 43,955

43.6.1 The recommended approach for provision is to assess the top layer (covering 50%) of trade receivables on an individual basis
and apply a dynamic approach to the remainder of receivables. The procedure introduces a Group-standard for dynamic
provisioning:

• Provide an impairment loss for 50% of the outstanding receivable when overdue more than 90 days, and
• Provide impairment loss for 100% when overdue more than 120 days.

43.7 Concentration risk

The sector wise analysis of receivables, comprising trade debts, loans and advances and bank balances are given below:

As at As at
June 30, June 30,
2017 2016

Textile and chemicals 871,525 475,256


Glass 31,056 63,940
Paper and board 10,348 32,157
Pharmaceuticals 384,245 235,235
Paints 47,785 36,855
Banks 1,266,464 258,962
Loans and advances and others 1,775,848 1,226,553
4,387,271 2,328,958
Provision for:
- Doubtful debts - note 11 (88,944) (43,955)
4,298,327 2,285,003

43.8 Other price risk is the risk that the value of future cash flows of the financial instrument will fluctuate because of changes in
market prices such as equity price risk. Equity price risk is the risk arising from uncertainties about future values of investment
securities. As at the balance sheet date, the Group is not materially exposed to other price risk.
ICI Pakistan Limited Annual Report 2016 -17 F 103

Amounts in PKR ’000

44 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent
liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through
an adequate amount of committed credit facilities. The Group treasury aims at maintaining flexibility in funding by keeping
committed credit lines available.

The table below analyze the Group's financial liabilities into relevant maturity groupings based on the remaining period at the
balance sheet to the maturity date.
Carrying Contractual Less than
amount cash flows one year
As at June 30, 2017
Financial liabilities
Trade creditors - note 23 1,846,046 (1,846,046) (1,846,046)
Bills payable - note 23 3,301,163 (3,301,163) (3,301,163)
Accrued mark-up 103,473 (103,473) (103,473)
Accrued expenses - note 23 2,537,351 (2,537,351) (2,537,351)
Technical service fee / Royalty - note 23 21,640 (21,640) (21,640)
Distributors' security deposits - payable on
termination of distributorship - note 23 and 23.3 101,657 (108,773) (108,773)
Contractors' earnest / retention money - note 23 10,572 (10,572) (10,572)
Unclaimed dividends - note 23 80,568 (80,568) (80,568)
Payable for capital expenditure - note 23 1,109,672 (1,109,672) (1,109,672)
Others - note 23 158,527 (158,527) (158,527)
Long-term loans - note 20 5,567,145 (5,567,145) (647,667)
Liabilities subject to finance lease - note 22 2,808 (2,808) (2,009)
Short-term borrowings - note 24 2,128,905 (2,128,905) (2,128,905)
16,969,527 (16,976,643) (12,056,366)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different
amount.

As at June 30, 2016


Financial liabilities
Trade creditors - note 23 1,309,635 (1,309,635) (1,309,635)
Bills payable - note 23 2,557,323 (2,557,323) (2,557,323)
Accrued mark-up 77,663 (77,663) (77,663)
Accrued expenses - note 23 1,857,509 (1,857,509) (1,857,509)
Technical service fee / royalty - note 23 19,778 (19,778) (19,778)
Distributors' security deposits - payable on
termination of distributorship - note 23 and 23.3 101,113 (108,191) (108,191)
Contractors' earnest / retention money - note 23 10,245 (10,245) (10,245)
Unclaimed dividends - note 23 70,648 (70,648) (70,648)
Payable for capital expenditure - note 23 547,635 (547,635) (547,635)
Others - note 23 142,053 (142,053) (142,053)
Long-term loan - note 20 4,046,369 4,046,369 (393,783)
Short-term borrowings - note 24 1,937,184 (1,937,184) (1,937,184)
12,677,155 (4,591,495) (9,031,647)
F 104 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000

45 Capital risk management

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern so that it can
continue to provide returns for shareholders and benefits for other stakeholders; and to maintain a strong capital base to support
the sustained development of its businesses.

The Group manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes
in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
to shareholders or issue new shares. The Group also monitors capital using a gearing ratio, which is net debt, interest bearing
loans and borrowings including finance cost thereon, trade and other payables, less cash and bank balances. Capital signifies
equity as shown in the balance sheet plus net debt. The gearing ratio as at June 30, 2017 and June 30, 2016 is as follows:
As at As at
June 30, June 30,
2017 2016

Long-term loans - note 20 5,567,145 4,046,369


Short-term borrowings and running finance - note 24 2,128,905 1,937,184
Total debt 7,696,050 5,983,553
Cash and bank balances - note 15 (1,266,464) (258,962)
Net debt 6,429,586 5,724,591
Share capital 923,591 923,591
Capital reserves 309,643 309,643
Unappropriated profit 15,102,390 13,341,517
Equity 16,335,624 14,574,751
Capital 22,765,210 20,299,342

Gearing ratio 28.24% 28.20%

46 Accounting estimates and judgements

Income and sales taxes

The Company takes into account the current income and sales tax law and decisions taken by appellate authorities. Instances
where the Companys's view differs from the view taken by the authorities at the assessment stage and where the Company
considers that its view on items of material nature is in accordance with law, the amounts are shown as contingent liabilities
(unless there is remote possibility of transfer of benefits). The details of the tax matters are as follows:

In the case of assessment year 1998-99, the Appellate Tribunal Inland Revenue (The Tribunal) on September 19, 2008 had set
aside the assessments made by FBR. The re-assessment was finalized by the department on June 29, 2010 in which the issues
pertaining to date of commissioning of PTA’s plant & the tax depreciation claimed thereon, restriction of cost of capitalization of
PTA plant and addition to income in respect of trial production stocks were decided against the Company. The Company had filed
an appeal against the said order before the CIR (Appeals) which was decided on November 24, 2015 in which the issue of date
of commissioning of PTA’s plant & the tax depreciation claimed thereon and the issue of addition to income in respect of trial
production stocks were decided in Company 's favour however the issue of restriction of cost of capitalization of PTA plant was
decided against the Company. The Company and FBR have filed the appeals on respective matters decided against them in
Tribunal the hearing of which is yet to be conducted.

In the case of assessment year 2002-2003, on receipt of notice under section 62 of the Income Tax Ordinance, 1979, the Company
had filed a writ petition in the Supreme Court, after it being dismissed by the Sindh High Court on maintainability, challenging FBR’s
notice which stated that the effective date of PTA’s demerger was August 6, 2001 (falling in assessment year 2002-03) rather than
the effective date given in the Scheme of Arrangement as October 1, 2000 (which falls in assessment year 2001-02). The notice
had raised certain issues relating to vesting of PTA assets by the Company. On March 18, 2015, the Supreme Court has passed
an interim order stating that this case has nexus with the case of assessment year 2001-02 and hearing will
ICI Pakistan Limited Annual Report 2016 -17 F 105

take place once the High Court decides the case in assessment year 2001-02. The High Court decided the same in favor of
the Company and stated that the assessment for AY 2001-2002 is time barred. The department filed an appeal in the Supreme
Court against the order of the High Court. On March 13, 2017, the Supreme Court dismissed the appeal of the department
pertaining to assessment year 2001-2002 and upheld the directions of the High Court and adjudged the case as being barred
by limitation and thereby restoring the position in the original order whereby unabsorbed depreciation was allowed. Further, the
Supreme Court gave directions to the company vide its order dated March 14, 2017 to file its reply to the notice dated May 26,
2005 with respect to AY 2002-2003. Thereafter the Company submitted its response to the department in consultation with its
external counsel. On May 15, 2017 the DCIR passed its assessment order disallowing depreciation relating to PTA assets,
Capital Gain on Transfer of PTA Plant, Capital Gain on exchange of Shares, Financial charges on loans Subordinate to Pakistan
PTA, Excess Perquisites, discounts, Interest paid to ICI Japan, Provisions and Write Offs. An appeal with the CIR has been filed
by the company against the said order. This appeal is still pending. Further, the Company filed an appeal in the Sindh High Court
against the said order which has granted stay against the said order.

In the case of Tax Years 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010, FBR had made disallowances on the matters
related to provisions charged under various heads, financial charges, gain on disposal of fixed assets, exchange loss, proration
of expenses against capital gains and interest free loans offered to employees. The CIR (Appeals) has allowed all the issues in
Tax Years 2003 to 2010 in Company's favor (except 2 issues in tax year 2003 and 2010) against which appeals have been filed
by FBR in the Tribunal. Out of the 2 issues which were not decided in Company's favor, one relates to disallowance of financial
charges in tax year 2003 which has now been decided in company's favor in the order dated June 15, 2017, whereby with
respect to issue pertaining to tax year 2010, we have filed an appeal in the Tribunal against CIR (Appeals)’s decision.

The Additional Commissioner Inland Revenue (ACIR) through its order dated June 07, 2012 disallowed tax loss on disposal of
fixed assets on the grounds that the same were sold through negotiations and not through auction as required by law. ICI filed an
appeal against the said order with the Commissioner Inland Revenue (CIR), who decided the appeal in company’s favor.
Consequently the ACIR being dissatisfied with the CIR order filed an appeal with the ATIR. ATIR through his order dated December
01, 2016 decided the matter against ICI. ICI had filed an appeal in the High Court against the said order, the hearing of which is
yet to be conducted

Availing the exemption as per clause 103 A, Part 1, 2nd Schedule of Income Tax Ordinance 2001 on inter-corporate dividend paid
to Group Company entitled to Group Relief under section 59 B of the Income Tax Ordinance 2001, ICI disbursed the dividend
without tax deduction to Lucky Holdings for dividends announced on 27th August, 2015 and on 19th February, 2016. However,
Federal Board of Revenue not being satisfied, through an Order dated 2nd September, 2016, has called for the deposit of tax on
such dividends along with penalties and additional tax. The Company filed an appeal against the said order in the High Court which
has granted a stay against the said order. The Company is confident that there is no merit in this claim of FBR

"In course of conducting a sales tax audit for the period July 2012 to June 2013, DCIR of FBR raised certain issues with respect to
exemption and zero-rating / reduced rate benefit available to the Company on its sales. On September 12, 2014 the Company received
an order in which demand of PKR 952 million was raised. An appeal was filed with CIR(A) which was decided against the Company
however directions were given to DCIR to amend the original order if the returns are revised by the Company subject to approval of
FBR itself. The application for revision of return filed by the Company is pending with FBR. The Company being aggrieved has filed a
suit in the Sindh High Court for relief in which the Court has granted ad-interim relief till the next date of hearing which is yet to take
place. The Company is confident that there is no merit in this claim of FBR regarding revenue loss and hence, considering no probability
that the case would be decided against the Company, no provision in respect of this has been made in these financial statements.

Pension and Gratuity

Certain actuarial assumptions have been adopted as disclosed in note 18 to the consolidated financial statements for valuation
of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years
might affect gains and losses in those years.

Property, plant and equipment

The estimates for revalued amounts, if any, of different classes of property, plant and equipment, are based on valuation performed
by external professional valuer and recommendation of technical teams of the Group. The said recommendations also include
estimates with respect to residual values and depreciable lives. Further, the Group reviews the value of the assets for possible
impairment on an annual basis. The future cash flows used in the impairment testing of assets is based on management's best
estimates which may change in future periods. Any change in the estimates in future years might affect the carrying amounts of
the respective items of property, plant and equipment with a corresponding affect on the depreciation charge and impairment.

47 Standards, amendments and interpretations adopted during the year

The accounting policies adopted in the preparation of these consolidated financial statements are consistent with those of the
previous financial year except as follows :
F 106 ICI Pakistan Limited Annual Report 2016 -17

Notes to the Consolidated Financial Statements


For the year ended June 30, 2017

Amounts in PKR ’000


47.1 New and amended standards

The Company has adopted the following revised standards and amendments of IFRSs which became effective for the current year:

IFRS 10 - Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial
Statements: Investment Entities: Applying the Consolidation Exception (Amendment)
IFRS 11 - Joint Arrangements: Accounting for Acquisition of Interest in Joint Operation (Amendment)
IFRS 1 - Presentation of Financial Statements: Disclosure Initiative (Amendment)
IAS 16 - Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of Acceptable Method of Depreciation and
Amortization (Amendment)
IAS 16 - Property, Plant and Equipment IAS 41 Agriculture - Agriculture: Bearer Plants (Amendment)
IAS27 - Separate Financial Statements: Equity Method in Separate 'Financial Statements (Amendment)

Annual improvements to IFRSs 2012-2014 Cycle

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Changes in methods of disposal
IFRS 7 - Financial Instruments: Disclosures - Servicing contracts
IFRS 7 - Financial Instruments: Disclosures - Applicability of the offsetting disclosures to condensed interim financial statements
IAS 19 - Employee Benefits - Discount rate: regional market issue
IAS 34 - Interim Financial Reporting - Disclosure of information 'elsewhere in the interim financial report'

The adoption of the above revised standards, amendments and improvements does not have any material effect on these
financial statements.

Standards, amendments and improvements to approved accounting standards that are not yet effective

The following revised standards, amendments and improvements with respect to the approved accounting standards as
applicable in Pakistan would be effective from the dates mentioned below against the respective standards or interpretations:

Standard or Interpretation Effective date (annual periods


beginning on or after)

IFRS 2 – Classification and Measurement of Share Based Payment Transactions (Amendment) January 01, 2018
IFRS 10 - Consolidated Financial Statements and IAS 28 Investment in Associates and Yet not finalised
Joint Ventures: Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (Amendment)
IAS 7 - Statement of Cash Flows: Disclosure Initiative (Amendment) January 01, 2017
IAS 12 – Income Taxes – Recognition of Deferred Tax Assets for Unrealized losses January 01, 2017
(Amendments)
IFRS 4 - Insurance Contracts: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance January 01, 2018
Contracts – (Amendments)
IFRIC 22 - Foreign Currency Transactions and Advance Consideration January 01, 2018
IFRIC 23 - Uncertainity over Income tax treatment January 01, 2019

The Company expects that the adoption of the above standards and amendments will not have any material impact on the
Company's financial statements in the period of initial application.

Further, the following new standards have been issued by IASB which are yet to be notified by the Securities and Exchange
Commission of Pakistan (SECP) for the purpose of applicability in Pakistan.
ICI Pakistan Limited Annual Report 2016 -17 F 107

Standard IASB effective date (annual


periods beginning on or after)

IFRS 9 – Financial Instruments: Classification and Measurement January 01, 2018


IFRS 14 – Regulatory Deferral Accounts January 01, 2018
IFRS 15 – Revenue from Contracts with Customers January 01, 2018
IFRS 16 – Leases January 01, 2019
IFRS 17 - Insurance Contracts January 01, 2021

The Group expects that above new standards will not have any material impact on the Company's financial statements in the
period of initial application.

48 Post balance sheet events - dividends

The Directors in their meeting held on July 28, 2017 have recommended a final dividend of PKR 10.00 per share (June 30,
2016: PKR 9.00 per share). This dividend is in addition to interim dividend paid of PKR 8.00 per share during the current year.
The consolidated financial statements for the year ended June 30, 2017 do not include the effect of the final dividend which
will be accounted for in the year in which it is approved.

49 Date of authorization

These consolidated financial statements were authorised for issue in the Board of Directors meeting held on July 28, 2017.

50 General

50.1 Corresponding figures have also been rearranged and reclassified, wherever necessary, for better presentation. However, there
has been no material reclassification to report.

50.2 Figures have been rounded off to the nearest thousand rupees except as stated otherwise.

Muhammad Sohail Tabba Asif Jooma Muhammad Abid Ganatra


Chairman / Director Chief Executive Chief Financial Officer
F 108 ICI Pakistan Limited Annual Report 2016 -17

Glossary
ADD Anti Dumping Duties Security OPEC Organization of Petroleum
AGM Annual General Meeting HTM Heat Transfer Method Exporting Countries
APCMA All Pakistan Cement Manufacturing HYPI Hygiene Performance Index OPM Operating Profit Margin
AR Annual Report IAS International Accounting Standards OPV Open pollinated variety
ATF Aziz Tabba Foundation IASB International Accounting P&DD Performance and Development
BAC Board Audit Committee Standards Board Discussion
BBS Behaviour Based Safety IBFT Inter Bank Fund Transfer PAC Pakistan Agricultural Collation
BCR Best Corporate Report ICAP Institute of Chartered Accountants PACRA Pakistan Credit Rating Agency
BSL Business School Lausanne of Pakistan PAT Profit After Tax
Switzerland ICC International Chamber PBC Pakistan Business Council
CAA Civil Aviation Authority of Pakistan of Commerce PBS Patient Benefit Schemes
CAGR Compound Annual Growth Rate ICMAP Institute of Cost and Management PBT Profit Before Tax
CCG Code of Corporate Governance Accountant of Pakistan
PCP The Pakistan Center
CCPA Corporate Communication and IFAC International Federation for Philanthropy
Public Affairs of Accountants
PCT Pakistan Customs Tariff 
CDC Central Depositary Company IFAS Islamic Financial Accounting
PHE Plate Heat Exchanger
Standards
CDP Core Development Program PIACL Pakistan International Airline
IFRSs International Financial Reporting
CEO Chief Executive Officer Standards Corporation Limited
CFB Coal Fired Boiler INSEAD  Institut Européen d'Administration PICG Pakistan Institute of Corporate
CFO Chief Financial Officer des Affaires Governance
CGU Cash Generating Unit ISO International Organization for PIJBC Pakistan-India Joint Business
CIR Commissioner Inland Revenue Standardization Council
CM Contribution Margin IT Information Technology PKR Pakistani Rupee
CME Continued Medical Education IVSAA Indus Valley School of Art PPEs Personal Protective Equipment
Co. Company and Architecture PPG Polypropylene Glyco
CO2 Carbon DiOxide JCR-VIS Japan Credit Rating Vital PSF Polyester Staple Fibre
COD Chemical Oxygen Demand Information Services PSX Pakistan Stock Exchange
CPEC China Pakistan Economic Corridor KIBOR Karachi Inter Bank Offer Rate PTA Pure Terephthalic Acid
CSR Corporate Social Responsibility KPI Key Performance Indicators PU Polyurethanes
DA Dense Ash KPK Khyber PakhtunKhuwa PwC PricewaterhouseCoopers
DCIR Deputy Commissioner KSE Karachi Stock Exchange Limited PX Paraxylene
Inland Revenue KTPA Kilotons per annum Q Quarter
DFI Department of Financial Institutions L&D Learning and Development R&D Research and Development
DGAD Directorate General of LA Light ash RCMS Responsible Care
Anti-Dumping and Allied Duties LDRM Leadership Development Management System
DNA De oxy ribo nucleic acid Roadmap RISE Reach Inspire Sustain Enable
DRAP Drug Regulatory Authority LEDs Light-emitting diode ROCE Return on Capital Employed
of Pakistan LNG Liquid Natural Gas Rs Rupees
EBIT Earnings before interest and tax LOI Loss of Ignition RSB Refined Sodium Bicarbonate
EBITDA Earnings before interest tax LRBT Layton Rahmatullah SAP Systems Applications
depreciation and amortization Benevolent Trust and Products
EIA Environment Impact Assessment LTFF Long Term Financing Facility SBP State Bank of Pakistan
EMT Executive Management Team LTI Lost time injury SC Specialty Chemicals
EoGM Extra Ordianiary General Meeting LUMS Lahore University of SCB Standard Chartered Bank
EPA Environmental Protection Agency Management Sciences
SECP Securities and Exchange
EPM Enterprise Performance LWC Ladies Welfare Centre Commission of Pakistan
Management m3/te Meter Cube per ton SOGP Society of Obs and
EPS Earnings per share MALC Marie Adelaide Leprocy Centre Gynae Pakistan
ER Endoplasmic reticulum MAP Management Association SOP Standard Operating Procedure
ERM Enterprise Risk Management of Pakistan SOx Sulphur Oxide
ERP Enterprise Resource Planning MEG Mono-Ethylene Glycol SPLY Same period last year
EVP Employee Value Proposition MoA Memorandum of Association
SWOT Strenghts Weaknesses
FFFP Fellowship Fund for Pakistan MOU Memorandum of Understanding Opportunites and Threats
FTR Final Tax Regime MS MicroSoft TCF The Citizens Foundation
FWO Frontier Works Organization MT Metric Ton TJ Terajoule
FY Financial Year MW megawatt TNA Training Needs Assesment
GC General Chemicals NAFA NBP Fullerton Asset TPD Tons per day
GDP Gross Domestic Product Management Limited
TSR Total Shereholder Return
GIDC Gas Infrastructure NBFI Non-bank Financial Instituitions
UK United Kingdom
Development Cess NBP National Bank of Pakistan
UN United Nations
GJ/Te Giga joule per ton NBV Net Book Value
UNCG United Nations Global Compact
GM General Manager NEQS National Environment
Quality Standards URS United Registrar Systems
GPM Gross Profit Margin
NGO Non Government Organization USA United States of America
GR Graduate Recruit
NIB National Investment Bank USAID The United States Agency for
GRI Global Reporting Initiative
International Development
HAPI Health Assessment NOx Nitrogen Oxide
Performance Index USD United States Dollar
NPR Non-product related
HFO Heavy Furnace Oil NSI Net Sales Income VOC Volatile Organic Compound
HR Human Resources NTC National Tariff Commission VP Vice President
HR&RC Human Resource and OEE Operational Eco Efficiency WEF World Economic Forum
Remuneration Committee OHSAS Occupational Health and Safety WOB Women on Board
HS CODE Harmonized System Codes Administration Standards WWF World Wildlife Fund
HSE Health Safety and Environment OLM Operating Loss Margin YBG Yunus Brothers Group
HSE&S Health Safety Environment and OPD Out Patient Department YGL Young Global Leader
ICI Pakistan Limited Annual Report 2016 -17 F 109

Admission Slip
The Sixty-Sixth Annual General Meeting of ICI Pakistan Limited will be held on September 26, 2017, at 10.30 a.m.
at ICI House, 5 West Wharf, Karachi.

Kindly bring this slip duly signed by you for attending the Meeting.

Company Secretary

Name Holding

Shareholder No. Signature

Note:

i) The signature of the shareholder must tally with the specimen signature on the Company's record.

ii) Shareholders are requested to hand over duly completed admission slips at the counter before entering the
Meeting premises.

CDC Account Holders / Proxies / Corporate Entities:

a) The CDC Account Holder / Proxy shall authenticate his/her identity by showing his / her Identity by showing
his / her original
b) Computerized National Identity Card / Smart National Identity Card (CNIC/ SNIC) or original passport at the
time of attending the Meeting.
c) In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen signature
of the nominee shall be produced at the time of the Meeting (unless it has been provided earlier).

This Admission Slip is Not Transferable


DIVIDEND MANDATE (MANDATORY)

By virtue of the provisions of the Companies Act, 2017, shareholders are MANDATORILY required to provide their
bank account details to receive their dividends by way of direct credit or electronic transfer to their bank account
instead of receiving them through dividend warrants (crossed as A/c Payee only).

Bank Account Details of Shareholder for Payment of Cash Dividend through electronic mode

I hereby wish to communicate my desire to receive my future dividends directly in my bank account as detailed
below:

Name of shareholder : ___________________________________

Folio number : ___________________________________

Contact number of shareholder : ___________________________________

Bank Account No. :___________________________________

Title of Account : ___________________________________

Type of Account : ___________________________________

Name of Bank : ___________________________________

Bank branch & full mailing address : ___________________________________

Contact No of bank : ___________________________________

It is stated that the above particulars given by me are correct to the best of my knowledge and I shall keep the
company informed in case of any changes in the said particulars in the future.

_______________________ __________________ ___________________________


Shareholder’s signature Date CNIC / SNIC No. (copy attached)
Affix
Correct
Postage

The Company Secretary


ICI Pakistan Limited
ICI House
5 West Wharf
Karachi-74000
Standard Request Form
Circulation of Annual Audited Accounts
The Company Secretary
ICI Pakistan Limited
ICI House, 5 West Wharf,
Karachi 74000

Subject: Circulation of Annual Audited Accounts via Email/CD/USB/DVD or Any Other

Pursuant to the directions given by the Securities and Exchange Commission of Pakistan through its SRO 787(1)/2014
dated September 8, 2014 and SRO 470(1)/2016 dated May 31, 2016 that have allowed the companies to circulate
its Annual Audited Accounts (i.e. Annual Balance Sheet and Profit and Loss Accounts, Statements of Comprehensive
Income, Cash Flow Statement, Notes to the Financial Statements, Auditor’s and Director’s Report) to its members
through Email/CD/DVD/USB/ or any other Electronic Media at their registered Addresses.

Shareholders who wish to receive the hardcopy of Financial Statements shall have to fill the below form and send us
to Company address.

I/We hereby consent Option 1 or Option 2 to the above said SROs for Audited Financial Statements and Notice of
General Meeting(s) delivered to me hard form instead Email/CD/DVD/USB or any others Electronic Media.

Option 1 – Via Email

Name of the Members/ Shareholders : ________________________________________________________________

CNIC /SNIC # : ________________________________________________________________

Folio / CDC Account Number : ________________________________________________________________

Valid Email Address : ________________________________________________________________


(to receive Financial Statements alongwith
Notice of General Meeting(s) instead of
hard copy, CD/DVD/USB.)

Option 2 – Hard copy

Name of the Members/ Shareholders : ________________________________________________________________

CNIC / SNIC # : ________________________________________________________________

Folio / CDC Account Number : ________________________________________________________________

Mailing Address : ________________________________________________________________


(on which I wish receive Financial Statements
alongwith Notice of General Meeting(s) instead ________________________________________________________________
of Email/CD/DVD/USB and any other
Electronic Media.) ________________________________________________________________

I/We hereby confirm that the above – mentioned information is correct and in case of any change therein, I/we will
immediately intimate to the Company’s Share Registrar. I/we further confirm that the transmission of Company’s Annual
Audited Financial Statements and Notice of General Meeting(s) through my/our above address would be taken as
compliance with the Companies Ordinance, 1984.

_______________________
Shareholder’s signature
Affix
Correct
Postage

The Company Secretary


ICI Pakistan Limited
ICI House
5 West Wharf
Karachi-74000
Revised Treatment of Withholding Tax

Please further note that under Section 150 of the Income Tax Ordinance 2001, and pursuant to Finance Act 2017,
withholding tax on dividend income will be deducted for ‘Filer’ and ‘Non-Filer’ shareholders @ 15% and 20% respectively.
According to clarification received from Federal Board of Revenue (FBR) withholding tax will be determined separately
on ‘Filer / Non-Filer’ status of principal shareholders as well as Joint-Holder(s) based on their shareholding proportions,
in case of joint accounts.

In this regard, all shareholders who hold share with joint shareholders are requested to provide shareholding proportions
of Principal shareholder and Joint-Holder(s) in respect of share held by them to our share registrar, FAMCO Associates
(Pvt) Limited, 8-F, Block-6, P.E.C.H.S. Nursery, Next to Hotel Faran, Shahrah-e-Faisal, Karachi

Following are the details held by Principal / Joint-Holder of the shares of ICI Pakistan Limited.

Principal shareholder Joint – Holder 1


Folio/CDS Total Name and No. of
Account # Shares CNIC # Shares Name and CNIC # No. of Shares

Joint – Holder 2 Joint – Holder 3


Name and CNIC # No. of Name and CNIC # No. of Shares
Shares

It is stated that the above mentioned information is correct and that I will intimate the changes in the above-mentioned
information to the company and its share registrar as soon as these occur.

Signature of Member : __________________

Signature of Joint-Holder 1: __________________ Signature of Joint-Holder 2 :______________________

Name : ___________________________________ Name : ________________________________________


[PLEASE WRITE NAME IN BLOCK LETTER] [PLEASE WRITE NAME IN BLOCK LETTER]

Signature of Joint-Holder 3: __________________

Name : ___________________________________
[PLEASE WRITE NAME IN BLOCK LETTER]
Affix
Correct
Postage

Share Registrar,
FAMCO Associates (Pvt) Limited,
8-F, Block-6, P.E.C.H.S. Nursery,
Next to Hotel Faran,
Shahrah-e-Faisal,
Karachi.

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